San Francisco-based Prologis has expanded its industrial portfolio in the Phoenix market with the $184 million purchase of a 170-acre logistics campus near the Goodyear Airport, TRD has learned.
The deal for Airpark Logistics Center is the largest multi-building industrial park sale in Arizona history, according to seller Creation, which is based in Phoenix and Dallas and developed the site with Boston-based CrossHarbor Capital Partners.
There was “really no asking price” on the newly built campus, whose first phase was recently completed, according to Creation co-founder David Sellers. He said via email that the deal was the result of a “direct discussion and negotiation” between Creation, Prologis and the brokerage Cushman & Wakefield. The brokerage handled both sides of the deal and was led by Will Strong, Kirk Kuller, Michael Matchett and Molly Hunt in the Mountain West division of its National Industrial Advisory Group. Sellers is also CEO of LGE Design Build, which constructed the property.
The original plan was to build, lease and then sell “upon stabilization” the first 86-acre, three-building, 1.44-million-square-foot phase of the total 2.7-million-square-foot project. That would leave 84 acres of undeveloped land, with a planned 1.2 million additional square feet, for the buyer to complete, Sellers said. But the company ended up selling the project to Prologis before leasing, so Prologis will now be responsible for filling the buildings, with JLL handling the marketing.
Prologis did not immediately respond to a request for comment about the deal, but Cushman’s Strong said in a statement that the “acquisition demonstrates Prologis’ ability to capitalize on long-term investment potential.”
“Airpark Logistics Center perfectly aligns with the evolving needs of businesses and supports the growing demand for industrial and cross-dock space in the Southwest Valley,” he added.
Pat Feeney Jr., executive vice president of CBRE’s Phoenix office, said via email that the real estate investment trust’s home base of San Francisco “differs greatly” from the Phoenix metro market regarding available land to purchase for industrial purposes.
“San Francisco is landlocked to a degree, whereas emerging markets surrounding Phoenix, such as Buckeye, Casa Grande, Laveen or Queen Creek offer new opportunities to expand,” he said.
The Bay Area is similar to Phoenix in that both have a lack of “permit-ready, fully improved land,” he added. And of course, industrial developers and REITs throughout the country are dealing with the same financing difficulties for a deal of this magnitude.
“There continues to be a disconnect between financing expectations and developers looking to get funding,” he said. “Rising interest rates and increasing equity requirements result in these transactions turning to private funding or funds previously allocated.”
Phoenix-based CBRE agent Tyler Vowels said the metro’s industrial market “remains extremely active” this fall, with the majority of tenants in the region looking for 50,000 to 300,000 square feet. So there could be plenty of takers for the big spaces available at Airpark, though there are many industrial projects under construction looking to take advantage of that demand as well. In the second quarter of this year, the Phoenix market led the nation in industrial product under construction, he said via email.
Creation is responsible for several other ongoing Arizona industrial projects, which will total more than 6.5 million square feet. The company puts the value of these new developments at more than $1.5 billion.
Prologis is developing its own projects in the market. It broke ground on a new 112-acre, two-building industrial facility in March a few miles from the Airpark site that is expected to come on market in early 2024. The developer also turned another 114 acres it bought in Goodyear in 2019 into Prologis Commerce Park.
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