Phoenix Leads in Office Conversions Amid Flurry of Projects

Phoenix leads the country in office conversion projects, with Formation Interests’ newest redevelopment purchase near a decommissioned mall serving as the latest evidence.

A new report from CBRE claims that 12.8 million square feet of offices is set to be converted this year nationwide, edging out the 12.7 million square feet of new office space expected to be constructed. Phoenix ranks among the top 10 U.S. cities in office conversion projects, with about 3 million square feet of offices in the city planned for conversion or already underway, the Phoenix Business Journal reported.

The Sun Belt city ranks No. 9 in the country for office conversion projects by square footage.

On June 2, Formation Interests bought a seven-building office park at 10801 North 24th Avenue in north Phoenix for $28 million. The Dallas-based company began demolition at the site on Wednesday and will turn it into a four-building, 425,000-square-foot industrial park called Formation Park 17.

The project is located on the other side of the I-17 freeway from the former Metrocenter mall, which shuttered in 2020 and was demolished for reconstruction in November. That property is planned to become The Metropolitan, a transit-oriented mixed-use development with thousands of apartments, a shopping center and a hotel.

Formation Park 17’s location near the Metrocenter site makes use of the Metro Parkway light rail station and aligns with developers’ plans to make it a transit-oriented industrial park. Construction is expected to begin in August with an estimated completion date next fall.

The redevelopment is Formation’s second project in the Phoenix region. It’s soon planning to open the first phase of Formation Park 10, a two-building, 428,000-square-foot business park in Goodyear. The second phase, which includes three buildings totaling 260,000 square feet, will break ground this year, the Business Journal reported.

Besides office-to-industrial conversions like those, Phoenix boasts a large number of office-to-residential projects such as the planned Metropolitan development. In the Phoenix area, 37 percent of office conversion projects that have been either recently completed or are currently planned or underway are multifamily developments.

— Chris Malone Méndez