Colliers in Arizona has released the annual Greater Scottsdale Airpark 2030 Report, indicating healthy conditions within the growing submarket. According to the report, demand for commercial space in the area is exceeding supply and development of new space is being handled at a healthy pace.
“Many are speculating a future recession, but we are not overly concerned about that for the Scottsdale Airpark,” says Jim Keeley, SIOR, CCIM and founding partner of the Colliers Scottsdale office. “When the last recession hit in 2008, this submarket was dramatically overbuilt. Since 2018, the Scottsdale Airpark market has been in a state of equilibrium with supply and demand in balance. Current conditions indicate remarkable economic health in the area with demand outpacing the supply of space in most every product type.”
The Scottsdale Airpark 2030 Report is created each year by Colliers in Arizona to educate the market about conditions in the submarket. At the end of 2022, the Airpark boasted approximately 3,326 resident companies with 64,130 employees. The submarket contains an inventory of approximately 47.3 million square feet of buildings.
PropTech (Property Technology) companies are a growing category of tenants. These firms are helping individual companies research, buy, sell and manage real estate as occupancy changed post-Covid. These firms are designing space to embody more of a “Community Hub” that encourages employee collaboration with various engaging areas within the suite.
The Scottsdale Airpark area has experienced an increase in housing units, as developers look to provide residences to the growing workforce in the area. Kierland’s Ladlow’s Fine Furniture Store location is planned to become high-end apartments. The 330-unit ALTA Raintree Apartments opened in 2022 and the 192-unit TC Raintree project is currently under construction.
Other key changes in the Scottsdale Airpark submarket include the sale of CrackerJax (now named The Parque). Tech billionaire George Kurtz purchased the property in April 2022 and plans to build a legacy project on the site. Additionally, DraftKings Sportsbook broke ground in 2022 at the southeast corner of Greenway Hayden Looop and Bell Road, across from the clubhouse of TPC Scottsdale. This ±12,000 square foot facility will offer premier gaming, placing the Scottsdale Airpark in the new and exciting legal gaming industry.
We experienced the completion of some historic factors in the Scottsdale Airpark during 2022. The Herberger family, who began purchasing land in the area in the late 1950s, sold CrackerJax in 2022, which ended their era of land development in the submarket. Judd Herberger’s passing in 2021, following the city’s loss of his other family members involved in the market, signaled an end of the Herbergers’ incredible contributions to our commercial real estate growth. They will forever be remembered as dedicated, philanthropic heroes of our community.
Last year also completed Doug Ducey’s time as our Governor. Under his leadership, the Arizona State Land Department (ASLD) began selling “fee simple” land in and around Scottsdale Airpark. This brought new and exciting development opportuntiies that were previously difficult to obtain. This new policy led to such developments as Cavasson and the Nationwide project. In November 2022 the northeast corner of Hayden and Loop 101 was auctioned, with HonorHeath prevailing. The southeast corner of that intersection was purchased by Axon more than a year ago and will be the site of a new corporate headquarters for the company. The southwest corner was purchased in April 2022 by VanTuyl/DeRito Group for future development. Additionally, Mack Companies bought 124 acres at the northeast corner of Loop 101 and Bell Road for $125 million in March 2022.
The Scottsdale Airpark will continue experiencing dynamic changes as we move forward. Projects planned include $29 million in renovations to the Kierland Office Park. The $1 billion Optima McDowell Mountain Village will break ground soon at the southeast corner of Loop 101 and Scottsdale Road. Its six buildings will include luxury residences, retail and commercial space. The Scottsdale Promenade at the southeast corner of Scottsdale Road and Frank Lloyd Wright Boulevard sold in 2022 and is expected to undergo renovations and upgrades in 2023. These improvements and more interest in this submarket are sure to bring more companies to Scottsdale Airpark. We anticipate the employee base to grow to 70,000 by the end of the decade, working in what is projected to be a submarket inventory of at least 50 million square feet by 2030.