Huge warehouse planned in Avondale

A large real-estate developer and investment manager are teaming up to build a sprawling, 1 million-square-foot speculative warehouse complex in the West Valley.

The Dallas-based Trammell Crow Co., one of the country's largest commercial-real-estate developers, and Clarion Partners LLC, a New York-based real-estate-investment manager, said they have formed a joint venture to develop the Coldwater Depot Logistics Center at Interstate 10 and 127th Avenue in Avondale. Construction is scheduled to begin this summer, company officials said. They did not provide an estimated cost or completion date, saying the specific plan could change if a large tenant is signed before construction.

The project is further proof that the West Valley has become one of the hottest areas in the Southwest for the development of large warehouse facilities to store, package and ship consumer goods ordered via catalog, phone and the Internet.

Local real-estate analysts said the announcement is significant because Coldwater Depot is a speculative project -- a project for which no tenants have been signed up in advance.

Matt DePinto, senior research analyst at commercial-real-estate firm Lee & Associates in Phoenix, said no developer has committed to building a speculative warehouse and distribution-center project in metro Phoenix since the recession hit hard in 2008.

Other warehouses and distribution centers have been built since then, he said, but only for occupants that had signed long-term lease contracts in advance. Such projects are known as "build to suit."

Speculative development is more risky, DePinto said, because the developer is gambling it will find tenants during or after construction of the facility.

"We're close to being able to take that gamble for the first time in years," he said. "That's huge."

According to the Coldwater Depot developers, an initial phase consisting of 600,000 square feet will be developed, with the capability to expand the building in later phases to 1 million square feet.

The 56-acre site is the only "shovel-ready" industrial-development site available in the Southwest Valley along a major West Coast-East Coast transportation route, the developer said.

The project is ideal for all types of distribution, including warehouse and fulfillment centers, said Jim Mahoney, senior managing director of Trammell Crow's Phoenix office.

"We believe there is opportunity to deliver a product that is geared toward the big-box distribution market, and we look forward to partnering with the city of Avondale to attract corporate and commercial users," Mahoney said.

Industrial development has been a bright spot in metro Phoenix's otherwise dismal construction industry during the past two years. Other than industrial projects such as warehouses and distribution centers, only the construction of multifamily housing has seen a significant increase.

A Lee & Associates report on industrial real-estate market activity in the first quarter shows that the pace of recovery has slowed somewhat but that the vacancy rate for industrial properties in metro Phoenix remains just under 14 percent -- about half the office market's vacancy rate. More than 3.1 million square feet of industrial-building space was under construction in the first quarter in metro Phoenix, and about 560,000 square feet of new space was completed, according to the report.

Clarion Partners asset manager Ryan Collins said his company was emboldened by the fact that companies have absorbed millions of square feet of available warehouse space in metro Phoenix in the past two years.

"With positive net absorption experienced in the metropolitan Phoenix industrial market in 2010 and 2011, and the interest by a number of companies seeking locations in southwest Phoenix, we believe the time is right for the next large distribution development," Collins said.

by J. Craig Anderson - Apr. 5, 2012 06:37 PM The Republic | azcentral.com



Huge warehouse planned in Avondale