Office
Office vacancy shrunk by approximately 200,000 square feet over the last twelve months. Slowly, but surely, many smaller spaces have been filling up and the weak office market that began in 2001 has begun to strengthen.

Land
The limited supply of land has pushed land prices into the $15 to $20 per square foot range. Some retail zoned lots or pad sites on major roads are asking $25 to $30 per square foot. There are very few business parks in the greater Phoenix area with land prices this high, however due to the shrinking inventory of finished lots we see "end users" willing to pay the price to be in the Airpark. Why are they willing to pay? This employment base is closer to the upscale neighborhoods of Grayhawk, DC Ranch, Pinnacle Peak, Paradise Valley, etc., and the synergy of the area draws the end users.

Retail
New retail projects are still shaping this employment area. If you begin at the "now famous" Kierland Commons the retail mix is exciting and still growing. Further north on Scottsdale Road, the Scottsdale Promenade is under construction with office space and additional retail. Wescor is finishing the Scottsdale 101 600,000-square foot retail project with 9 pads and 10 majors including Expo Design Center, Babies 'R' Us, Bed Bath & Beyond, Circuit City, Loehmanns, Harkins Theaters and many others. Once you reach the Loop 101 Freeway and head southeast, three retail projects at Raintree and Loop 101 include the 90,000-square foot "Kohls Department Store," the "Golds Gym" anchoring Northsight Crossing and the new retail center on Butherus, west of Northsight Boulevard.

Car Dealerships
Car dealers, who are "the big daddy" of retail sales tax dollars, are still making a big impact beginning with the construction start this month on both the new 9-acre Schumacher European Mercedes Benz Dealership on Scottsdale Road, just south of the Loop 101 Freeway, and the 20-acre Lund Auto Complex (Cadillac, Hummer, Saab and others), at the SEC of Scottsdale Road and Loop 101 Freeway. As these seasoned dealers move to new facilities, their current facilities will be purchased by additional automobile users, further increasing the large sales tax base that the Scottsdale Airpark delivers to the city year in and year out.

Sports Related Facilities
Clustering around the Alltel Ice Den at Bell Road, east of Loop 101 are the following: rock climbing gym, taxidermy, golf physical therapy, Ball Park AZ (baseball batting practice), Outback Adventures / Bicycle Touring and Rentals, Plumb Dance and Performing Arts Center, horseback riding at Westworld, Scottsdale Martial Arts, American Elite Gymnastics, MBA Driving School and Aqua Safe Swim School. In negotiations are an inline skating and skateboard school, a gymboree type of business and a health and fitness center. The 30,000-square foot Scottsdale Gun Club in Northsight brings another service to the Airpark, adding to the over 100 different business categories already operating throughout the Airpark. These sports related facilities add a whole new dimension of indoor / outdoor and family fun in the Greater Scottsdale Airpark.

Interest Rates
Interest rates continue to play a major role in the construction in the Airpark as well as the continued demand for the office and office warehouse condominium market. Many professionals are purchasing 2,000 to 10,000 square foot units to own their own faculties at prices of $170 to $195 per square foot for office and $120 to $135 per square foot for office / warehouse.

Large Development Projects
As the office market strengthens the developers have begun construction on four large office projects (approximately 621,000-square feet) including the Raintree Corporate Center (150,000-square foot three-story office building) at the Loop 101, just north of Raintree Drive (under construction). Mammoth Equities (three-story 100,000-square foot office building, under construction) at the SEC of Raintree Drive and Loop 101, Promenade Corporate Center (125,000-square foot Phase I four-story building) at the SEC of Scottsdale Road and Frank Lloyd Wright Boulevard (under construction), Opus Northsight II (136,000-square foot, 3-story office building, under construction) at the SWC of Raintree Drive and 87th Street and Phase III of The Pinnacle (110,000-square feet, planned) at Scottsdale Road, just south of Greenway Parkway.

Freeway Impact
Many consumers don't go south of Shea Boulevard now. Everything they need is now within minutes of their home or work. Many new consumers from as far away as Chandler are coming to the Scottsdale Airpark for goods and services because of the Loop 101 Freeway. The employment base continues to grow with the ease of access from the freeway.

Furniture and Home Improvement Row
Scottsdale's "Furniture Row" is becoming well known. We are told by those in the industry that California buyers come here to shop for their furniture for their new homes. There are 287 companies in the Greater Scottsdale Airpark that cater to furniture and home improvement.

Other Happenings
DHL Worldwide Express continues to add employees and expand into the building at Pima and Bell. The McDowell Mountain Business Park has added about 15 new buildings in the last twelve months, with more sprouting up. Discount Tire Company has moved further north of the Scottsdale Airpark into a 150,000-square foot office building at Scottsdale Road and Thompson Peak Parkway. An insurance company purchased Discount's former corporate headquarters and will be occupying a portion of that building and leasing out the balance.

Historically, it takes about six months after the economy has turned around to recognize when it occurred. When have we seen this turnaround in the past? February 1984: The Airpark was just coming out the doldrums and all of a sudden there were several lots that were being sold with many new players coming to the area. Land prices escalated every ten days for about twelve months. March 1994: A fast flurry of large lots (2-5 acre sites) and sharp increase in land prices occurred. April 2004: Our prediction of when all economic indicators (companies growing, large consumption of land, etc.) will occur.

Although the majority of businesses in the Greater Scottsdale Airpark do not use the Scottsdale Airport on a daily basis, the airport itself is an integral part of the diverse economy in the Scottsdale Airpark. Many corporations have invested millions of dollars in building their corporate aviation facilities. Private developers have spent millions of dollars installing the private taxiway easements to access the Airport.

The airport has been operating for over sixty years in this location. When the City of Scottsdale took over the property from the Seventh Day Adventist Church, there were provisions in the original deed restrictions that say the airport property would revert back to the Church if Scottsdale did not maintain it as an airport and provide the Church access to it. The airport was one of the beacons that brought business to the Scottsdale Airpark and should be operating here permanently.

Since 1989 we have been trying to estimate what the Airpark would look like twenty years into the future. Our predictions state that the Greater Scottsdale Airpark urban core will have approximately 3,000 companies occupying over 25,000,000 square feet of buildings with approximately 50,000 employees.

It still appears as though these numbers are accurate, however in order to build the next 5,000,000 to 6,000,000 square feet of buildings we will see redevelopment. In the next five to six years some older buildings will be torn down and reconstruction of newer, higher density buildings will occur.

A special thanks to Colliers Classic brokers for their input and in particular, Ed Hadley for his tremendous gathering of data on all your businesses in the Airpark.

Jim Keeley, SIOR, CCIM, founded Classic Real Estate Corporation, now known as Colliers Classic, in 1983.

The firm conducts the majority of its commercial brokerage business within the Scottsdale Airpark and has concluded over 2,997 transactions and $939,079,908 of business.

Colliers Classic is located at 7845 E. Redfield Road,
Suite 100; Scottsdale, Arizona 85260;
Phone 480.596.9000; Fax 480.948.0502; www.colliersmn.com.

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