EastGroup to Build Industrial Park on 24 Acres Southeast of Phoenix

Article originally posted on CoStar on February 8, 2019

The timing is right for EastGroup's new industrial park, with the vacancy rate in the area at around 6 percent and dropping. Illustration: Colliers International

Real estate investment trust EastGroup Properties Inc. plans to break ground in April on the first two buildings of a planned industrial park in Gilbert, Arizona, joining projects totaling more than 1 million square feet in one of Phoenix’s most coveted warehouse and manufacturing locales.

Jackson, Mississippi-based EastGroup plans to build the park, to be called Gilbert Crossroads Business Park, just east of the southeast corner of Germann and Gilbert roads without any tenants in tow. It has scheduled the construction of a 58,000-square-foot building and 82,000-square-foot building, but plans to build two more in the future for a total of 320,000 square feet.

EastGroup bought the 23.6 acres from New York City based real estate investor and developer Rockefeller Group for $6.4 million last year, according to CoStar.

The transaction involved dividing a larger 42-acre parcel, with 18 acres on the back portion being rezoned for apartments, according to Colliers International Senior Vice President Paul Sieczkowski.

“The rezoning stipulated immediate development, and EastGroup is poised to break ground in early second quarter,” Sieczkowski said in a statement.

The site is about three-quarters of a mile from the Loop 202 freeway and Gilbert Road interchange, with a new full interchange planned less than a mile from the property at the Loop 202 freeway and Lindsay Road. The rapidly growing area is near more than 1.2 million square feet of retail and is surrounded by neighborhoods occupied by highly educated workers.

Industrial vacancies are below the historical average, and advanced manufacturing, including semiconductor chips made by Intel, the area’s largest employer, has transformed Chandler into one of Phoenix’s main tech hubs, according to CoStar Analytics.

Several other projects are in the construction pipeline, including defense and space contractor Orbital ATK’s 617,000-square-foot expansion into an advanced manufacturing facility. New industrial buildings have been a mix of logistics, flex data centers and manufacturing buildings, none bigger than Intel’s 2.15 million-square-foot expansion for its microchip factory, CoStar reports.

Chandler is also one of the most expensive industrial areas of Phoenix, in part due to high asking rents in its data centers and flex buildings, according to CoStar data.