Phoenix’s Successful Business Attraction Efforts Driving Leasing Activity

Article originally posted on CoStar on July 9, 2019

Following Allstate's expansion announcement, the insurance firm occupied 117,400 square feet at One Chandler Corporate Center in Chandler, Arizona, in January. Photo: CoStar

Following Allstate’s expansion announcement, the insurance firm occupied 117,400 square feet at One Chandler Corporate Center in Chandler, Arizona, in January.

Phoenix’s value proposition is becoming increasingly attractive and is luring companies from pricey coastal markets, bolstering office leasing activity. The intensifying war for talent, rising cost of living and doing business and political uncertainties has motivated companies to seek alternative locations—and Phoenix is benefiting. Over the past 12 months, companies have announced mega expansions and relocations to Phoenix that will result in thousands of new jobs and increased demand for office space.

Business attraction is supporting robust leasing volume in 2019. In the second quarter of 2019, leasing activity exceeded 3.5 million square feet, the highest level since the third quarter of 2017 and far above the metro area’s average of 2.5 million square feet.

Insurance, financial activities and technology companies account for the majority of recent job announcements. Tenants are landing in the East Valley—particularly Chandler, Tempe and Scottsdale. Access to a large and talented labor pool, the concentration of newly developed Class A office space, a mix of affordable and executive housing and amenities are luring employers to the East Valley.

Some of these announcements include:

· Allstate, 217,000 square feet of space and 2,500 new jobs in Chandler

Late last year, Allstate, who has an existing presence in Scottsdale, announced it would establish an insurance operations center in Chandler, creating 2,500 new jobs. The insurer leased 217,000 square feet of office space between two 4-Star buildings at One Chandler Corporate Center and Allred Park Place – Building 4. Allstate could build its own corporate campus in the area.

· Voya Financial, 151,400 square feet, 1,000 new jobs in Chandler

Chandler also landed another significant locate with Voya Financial. The company will create 1,000 new jobs and occupy 151,400 square feet at 1700 S. Price Road in Chandler in early 2020. Voya will maintain its Scottsdale operations at 337 E. Doubletree Ranch Road.

· Nationwide Mutual Insurance, 460,000 square feet, over new 500 jobs in Scottsdale

Nationwide Mutual Insurance plans to establish a regional headquarters in North Scottsdale. Late last year, Nationwide Realty Investors, an affiliate of Nationwide, announced a 134-acre mixed-use development dubbed Cavasson. The development is on Loop 101 at the southwest corner of Hayden Road and Legacy Boulevard. Phase 1 of the project is expected to break ground sometime this year and will include a 460,000-square-foot regional headquarters for Nationwide Insurance that will house more than 2,200 workers.

· Hawaiian Airlines and Viking Cruises, combined 60,900 square feet and 500 new jobs in Tempe

In Tempe, Hawaiian Airlines and Viking Cruises are each expanding their footprints and leasing space at Hayden Ferry Lakeside. Hawaiian airlines plans to hire 150 tech professionals and will move from a temporary facility in Scottsdale to it permanent space at 60 E. Rio Salado, taking 23,500 square feet. Viking Cruise Lines, which is new to Phoenix, also signed a 37,400-square-foot lease at the same building and has plans to hire 350 employees.