As an ambassador representing the Greater Phoenix Economic Council (GPEC), I was delighted this morning to hear some really good news about Phoenix. This came from four top national site selectors- people who do detailed analysis for businesses before they decide on locating an industrial site. The speakers, Tim Feemster, Senior V.P. at Grubb & Ellis, Tom Freeman, Managing Director at Jones Lang LaSalle, Kirk Killian, Executive V.P. at National Mission Critical Facilities and Bill Honsaker, Managing Director at Jones Lang LaSalle. All four were equally  upbeat about the long-term prospects for Phoenix as a destination for major industries.

They agreed that Phoenix has a definitive advantage over California in attracting major industrial sites including data centers. Competition here will be determined by two major factors, namely the cost of electricity and transportation costs, two areas that need greater work. According to Feemster, transportation costs account for over 50% of costs in the supply chain and that’s an area that businesses look closely when they try to locate to sites like Phoenix.

For instance, Quincy, WA has attracted some of the largest data centers in the country because of incentives that they have been offering businesses in terms of power costs. A reduction of a penny could bring in millions of dollars in revenue for these businesses over a 15 to 20-year term. I hope an economy package that’s currently with the state legislature will take a good look at the competition around us. Meanwhile, GPEC has had one of its best years ever and has attracted over 18 businesses to the area in a short time frame.  A few other interesting  aspects of the industrial real estate scene in Phoenix:

• 5,000 to 20,000 sq.ft retail/industrial space- this sector is in really bad shape in Phoenix. Estimated vacancies in this area in Phoenix: 51%! This means a lot of cash rich corporations may consider investing in these properties.
• Projections for big industrial sites look fairly robust mirroring a national trend. Demand for co-locating properties with other businesses has tripled over the last 14 months.