Tempe and Scottsdale are known as Phoenix’s “traditional” Valley tech hubs due to their live, work, and play environments. But if the Warehouse District isn’t on your radar, you may not be as cool as you think.
Heavy tech company activity in the Tempe and Scottsdale submarkets over the last several years has caused a dramatic rise in rental rates. Rents at Galleria Corporate Centre in Old Town Scottsdale, for example, have increased 81 percent in just five years—to $38.00 per square foot today. A similar trend is happening at Hayden Ferry Lakeside in downtown Tempe, where tech activity boosted rents in Phase I and Phase II from $28.00 and $29.00 per square foot, respectively, in 2011 to $45.00 per square foot today. These rental trends have created cost concerns for many tech and start-up companies who do not have endless amounts of cash on hand, but still want to provide their employees with a unique company culture in the right environment.
As inventory continues to tighten and rent remains at historical highs for the more traditional submarkets, Phoenix’s Warehouse District is gaining momentum as a viable alternative for technology companies. Not only does the Warehouse District provide space at a fraction of the cost of Phoenix’s other top tech locations, but it also provides an opportunity to turn obsolete warehouse space into modern, creative office product.
The Warehouse District is only a five minute walk to the Phoenix Valley Metro Light Rail and numerous retail amenities located downtown. The City of Phoenix is very focused on the success of the District, and is continuing to improve the walkability and safety of the area. The City’s preliminary efforts have already produced successful results as companies that would have previously shied away from Phoenix’s corporate downtown area have chosen to locate in the Warehouse District. These include Galvanize, WebPT, Gould Evans, Arizona State University and R&R Partners.
In the case of Galvanize, the company was impressed by the urban character and charm of the buildings in the Warehouse District as well as the proximity to all of the amenities in downtown Phoenix, two appealing attributes needed to attract today’s urban professional. The company is also excited to bring new life to a historic location and to be a part of the area’s growth potential.
While space options in the Warehouse District is currently very limited, more investors are better understanding the opportunities within the area. This will most likely spur more infill/adaptive reuse projects that will provide companies with additional options for their creative office solutions.
As the lease on your office space approaches its expiration or you consider your next office move, take a close look at the Warehouse District. You may find it provides everything you need.