TSMC effect: Phoenix's northwest valley sees commercial real estate boom
While some parts of Phoenix's industrial market soften, the Deer Valley submarket is bucking the trend as semiconductor-related companies flock to the area.
Story Highlights TSMC's $165 billion campus drives industrial growth in Phoenix
Northwest Valley submarket sees low vacancy rates and high demand
Suppliers and contractors are keen on the Deer Valley area near TSMC
As goes TSMC, so goes Phoenix's industrial real estate market.
Suppliers continue to gravitate to the Valley, angling to position themselves in the orbit of TSMC's ever-growing, $165 billion campus in North Phoenix.
And while more industrial supply is set to come online in north Phoenix in the years to come — the $7 billion Halo Vista master-planned community could bring millions of square feet on its own — for the time being, experts suggest that limited supply in the Northwest Valley industrial submarket is keeping lease rates high and vacancy rates low. The submarket, which includes the TSMC complex and the popular Deer Valley area, is one of Phoenix's most desirable locales for industrial tenants.
The metro's industrial vacancy rate climbed to 12.2% in the first quarter even as building deliveries dropped 37.1% year-over-year to 7.4 million square feet, according to a recent report from CBRE. But the Northwest Valley submarket saw its vacancy rate drop 40 basis points 'as Deer Valley continues to draw attention caused by TSMC's investment announcement,' the CBRE report found.
Overall, the under-construction pipeline in the Valley has slipped to 11.1 million square feet during the first quarter, which is the lowest total since the first quarter of 2021.
Despite the attention on Deer Valley, only 10% of the of the industrial space under construction in Phoenix — just shy of 1.1 million square feet — is situated in the Northwest Valley. Meanwhile, 80% of the industrial construction activity is situated in either the Southwest Valley or Southeast Valley, CBRE found.
How TSMC effect is playing out for tenants
The lack of projects in the immediate pipeline, combined with the promise of billions of dollars in investments from TSMC, has created a wealth of opportunity in the Northwest Valley submarket.
'TSMC has had a dramatic effect on not just sublease, but the entire market. It has increased demand meaningfully,' said Jonathan Keyser, managing partner of Scottsdale-based tenant representation firm Keyser Commercial Real Estate.
expand
Jonathan Keyser, founder of Keyser Commercial Real Estate, pictured in 2019.
Jim Poulin | Phoenix Business Journal
The Arizona Commerce Authority currently has 336 manufacturers in its pipeline of businesses looking to expand or relocate to the state, including more than 50 semiconductor-related companies. Meanwhile, the Phoenix Deer Valley Airport estimated in 2023 that the surrounding area will see about 7.4 million square feet of demand for logistics warehouses, flex industrial and flex office by 2028.
Keyser imagines a scenario where the whole northwest Valley will eventually 'morph together' into a huge, semiconductor-heavy submarket.
'It's not going to happen immediately, but there's a lot of demand and there's a lot of interest in that area,' he said. 'So yeah, I'm very bullish on it.'
TSMC will be at the heart of the growth, he added.
'I truly believe that TSMC deciding to put their most advanced manufacturing in Arizona is the biggest thing to ever happen to Arizona in the history of our state from an economic development standpoint,' Keyser said. 'I think most people do not realize the outsized impact that's going to have. Them picking Arizona basically made Arizona the center of the universe when it comes to chips."
While Keyser's firm has been representing semiconductor companies for years, the Valley's reputation in the industry has suddenly exploded.
"Now everyone is calling us 'the chip guys,'" he said. 'It's all directly related to TSMC.'
Keyser said the commercial real estate market includes 'very large users' alongside smaller users and other companies seeking an initial first phase trial before deciding whether to engage in a larger expansion in the area.
'There's some that already have contracts with TSMC and Intel and others, and there's others that are looking to use this as a way to get contracts,' Keyser said.
Increased focus on Deer Valley submarket
While Keyser said clients are interested in space throughout the Valley, he noted that his firm has also engaged with Mack Real Estate on behalf of clients interested in Halo Vista, once that project gets up and running.
'We're in discussions with them with multiple users that want to be a part of that,' he said.
Sunbelt Investment Holdings Inc. is another company that has invested considerably in the Deer Valley submarket. The first phase of the company's Deer Valley Business Campus spans about 255,000 square feet and is mostly leased out, said Robert Harding, industrial development manager at SIHI.
Harding said the company, which has another 80-100 developable acres east of Deer Valley Business Campus, has seen a mix of tenants interested in acquiring space in the submarket.
'A lot of our activity is either a supplier of TSMC or it's a contractor of TSMC, or potentially contractors that just know they are going to be in the area for a while," Harding said.
Beyond TSMC's presence, one of the main benefits of the Deer Valley submarket is access to the entire Valley through both I-17 and the Loop 101.
'The fundamentals of the Deer Valley submarket in particular have stayed fairly strong and consistent for the past year or two," Harding said. "Obviously industrial in general saw a massive boom in the past three, four years since Covid. But the Deer Valley submarket in particular has been strong, where you may have seen some weakness in some of the other markets."
Clint Hardison, co-founder of IKE Commercial Real Estate, said his firm has had 'several requirements up in the Deer Valley submarket.'
'We have had clients come along that are wanting to come to the Valley because of TSMC,' he said. 'So that has happened, but I have not seen a lot of them wanting to be anything other than right up there in that Deer Valley submarket.'
expand
Clint Hardison, co-founder of Ike Commercial Real Estate.
Ike Commercial Real Estate
Hardison noted that the growing interest in Deer Valley can create opportunities for landlords throughout the West Valley as the price delta between submarkets continues to grow. He suggested 'it could make a lot of sense' for users to gravitate to industrial space in cities such as Goodyear and Tolleson, adding that landlords in those submarkets are likely to be more aggressive than what their asking rates suggest.
That means tenants can hunt deals in certain parts of the West Valley as vacancy rates continue to rise in the metro.
'When you actually get down to brass tacks in negotiations, there are landlords out there who are getting a little bit desperate,' he said. 'They will offer deals that they would not have even thought about offering 12 months ago.'
Sign up here for the Phoenix Business Journal's free newsletters, and download our free app for breaking news alerts.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
Local coffee company reopening at Broad Steet Market
HARRISBURG, Pa. (WHTM) — The Broad Street Market Alliance announced earlier today that a local coffee company will soon be making its return to the Market. According to the Broad Street Market Alliance, the Harrisburg-based Elementary Coffee Co. will be holding its grand reopening inside the Market's Stone Building later this week on Saturday, June 7. Close Thanks for signing up! Watch for us in your inbox. Subscribe Now To celebrate the reopening, Elementary Coffee Co. will be offering free freshly-grilled Stroopies and baked goods by Baked By Bryn. Additionally, the coffee company will give 10% of its Saturday sales of coffee and tea back to the Broad Street Market Alliance to support its journey. 'Elementary Coffee Co. is beyond excited to be part of the historic Broad Street Market once again! We have always considered the Market, our fellow vendors, and our lively patrons to be our home. We are so happy to bring our business 'home' once again with a fresh twist on our original stand. Longtime supporters will recognize nostalgic items from before the Market fire, while being enamored by a beautiful new design alongside fresh new equipment: the goal being to streamline our drink-making for a more efficient espresso bar,' Andrea Grove, owner of Elementary Coffee Co. said. 'We cannot wait to celebrate the old and the new with you in the coming years as we whip up the unique coffees that have caffeinated our community for the past 10 years. We are so happy to be back!' Elementary Coffee Co. originally opened inside the Broad Street Market back in 2014, and has since grown into its own brick-and-mortar shop on 256 North Street. The company's stand at the Market was one of several who were displaced in 2023 after the Brick Building fire. 'We are thrilled to have long-time favorite, Elementary Coffee Co., back at the Broad Street Market,' Eric Hagarty, Chair of the Market, said. 'With coffee once again available in the Stone Building, the community will have even more great options to choose from when visiting the Broad Street Market.' Despite the fire that burned down the brick building at the market last year, the stone building remains open for business on Thursdays and Fridays from 7:00 a.m. to 6:00 p.m. and Saturdays from 7:00 a.m. to 4:00 p.m. abc27 news will keep you updated as more information becomes available. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
23 minutes ago
- Yahoo
Soldiers on US-Mexico border hunt drones with air defense radars typically used in combat
Soldiers from the 10th Mountain Division are at the U.S.-Mexico border tracking drones with the same kinds of radar systems that the U.S. funded for Ukraine to help the country counter aerial threats from Russia. The presence of these radar systems on the southern border highlights the proliferation of drones and their use by Mexico-based cartels. U.S. Customs and Border Protection officials say that the agency's personnel have witnessed reconnaissance drones surveilling border personnel and that the agency 'continues to receive reporting of Mexico-based cartels utilizing armed drones against rival cartels,' a spokesperson for CBP told Task & Purpose. 'Because of this evolving threat, CBP works with the Department [of] Defense to maximize domain awareness for border security and officer safety of all threats, to include armed small unmanned aerial systems (drones). CBP continues to assess that currently, Mexico-based groups utilize drones to fuel intra and inter-cartel violence,' the spokesperson said. The Department of Defense currently has around 8,500 troops supporting the Joint Task Force — Southern Border mission, providing assistance to Customs and Border personnel for logistics, vehicle maintenance, transportation, intelligence analysis, and aviation aerial reconnaissance. A small fraction of those, anywhere from 28 to 34 soldiers who are part of a 10th Mountain Division target acquisition platoon, are manning four radars across 2,000 miles of the U.S.-Mexico border to detect a growing number of drones that are suspected to be used by Mexico-based cartels. The commander of U.S. Northern Command told Congress in March that there are likely more than 1,000 drones spotted every month along the border. 'Across the border, drone sightings are in the thousands, so it's not unusual for us to see anywhere from 30 to 50 a day,' Maj. Sean Thomas, the 10th Mountain Division's deputy fire support coordinator and the senior effects operations officer for the Joint Task Force — Southern Border mission, told Task & Purpose. Thomas said that their role in providing CBP with air domain awareness, like drone detection and tracking, is 'to protect U.S. territorial integrity and JTF-SB personnel.' Brian Finucane, a senior adviser for the U.S. Program at the International Crisis Group, a non-profit think tank, said deploying combat radar systems is a type of escalation but noted that he's not aware of any drone attacks on U.S. personnel along the border that necessitate sending them as an 'operational necessity.' 'This is a very different sort of scenario than defending U.S. personnel in Iraq and Syria from drone attacks or defending Ukraine from Russian drone attacks. We're talking about a very different environment,' Finucane said. 'It has to be seen in the broader context of the administration trying to cast immigration in military or counterterrorism terms — deploying additional troops and other military assets to the border, sending migrants to Guantanamo Bay, using military aircraft for deportation flights, invoking wartime authorities to deport or rendition migrants. This has to be seen in the broader attempt to sort of cast migrations as some sort of wartime emergency.' The radar platoon is tracking and detecting small drones along the border and 'developing a pattern of life analysis.' The radar systems help soldiers identify information like the drones' altitude, speed and size, which they send to local CPB units for awareness. The unit is also doing a more thorough analysis of how the drones are being used and where they're going next, Thomas said. To do this analysis, the platoon is using artillery and air defense radars that have traditionally been used in combat, some of which have even been sent to Ukraine. The radars have long been used to detect enemy artillery, like rockets and mortars, but more recently, the systems are being used in military exercises and training events to track unmanned aerial systems, UAS, or drones. 'The size of the border is unlike anything that a normal division or target acquisition platoon ever looks at and considers, so the variations in terrain and type of operating area is massive and then just the sheer volume,' Thomas said. The platoon is learning more about terrain masking and how the radars work in a range of environments: green terrain, humidity, 5,000 ft mountain elevations, arid deserts and even near larger cities, like San Diego, California or El Paso, Texas. Doing detection near more populated areas, is teaching them more about radar interference, he said. 'There's significant mountains, there's urban population centers that we're as familiar with fighting in or training in so that's been an increase in what we're allowed to do and see,' Thomas said. The platoon operates Lockheed Martin's AN/TPQ-53 Quick Reaction Capability Radar, which is used in combat to detect rockets, mortars, and artillery. 'The Q-53 is traditionally counter fire or weapons locating radar, so we use those in a defense role so that if somebody fires a missile or artillery shell at us, we'll see where they shot from and where it's gonna land,' Thomas said. Upon arriving at the border, the platoon's radar was upgraded for small UAS detection and tracking 'instead of just a ballistic flight path projectile,' he said. Ukraine received 20 quick reaction radars back in 2015 when Russian-backed separatists began arriving in eastern Ukraine and helped bring down units' casualty rates from 47% to about 18%, Defense News reported in 2019. New contracts for Q-53 radars, $372 million worth, were included in 2023 U.S. military aid packages for Ukraine after its full-scale war with Russia began. Soldiers are also using the AN/MPQ-64 Sentinel radar system which is used for short-range air defense and can detect hostile planes, helicopters, drones or missiles, according to RTX (formerly Raytheon). The difference between using the Sentinel in combat and at the border, Thomas said, is that they're 'purely using this to find and detect' and not linking it to a Stinger missile or another weapons system meant to engage a threat. According to RTX, there are 300 Sentinels deployed around the world by U.S. and allied forces. Social media posts show that Ukrainians have even resorted to using mock-up versions of the American Sentinel system as decoys to deceive Russian forces. The dozens of soldiers who operate the radars hail from field artillery military occupational specialties for the Q-53 quick reaction radar and air defense soldiers on the Q-64 Sentinel. There are also a handful of soldiers who do maintenance and communications support assigned to the platoon. Before heading down to the border, the soldiers took part in live drone tracking exercises at Fort Huachuca, Arizona. But it wasn't the first time that the soldiers encountered drones. Some of the soldiers served in combat teams that were deployed to bases in Iraq and Syria, for Operation Inherent Resolve, the U.S. military's ongoing mission against the Islamic State, but found themselves in the crossfire of regional escalations after Israel declared war on Hamas after the Oct. 7 attack, Maj. Rachel Jeffcoat, a spokesperson for the 10th Mountain Division, told Task & Purpose. For months, American troops came under hundreds of rocket, mortar and drone attacks by Iranian-backed militias, including the Tower 22 drone attack in Jordan, which killed three Reserve soldiers and injured over 100 troops. Three of the division's soldiers were recognized for shooting down at least 28 one-way attack drones during their deployment, with each getting five kills to earn 'ace' status. The radar platoon at the border had also practiced flying, tracking and shooting drones down and testing the radar systems in a November exercise at their home base at Fort Drum, New York. 'We constantly provide a home station kind of a training download and update across the division every time one of the brigades comes back of 'hey this is what we're seeing this is the new system we use, this is how it worked,' Thomas said. Navy SEAL Team 6 operator will be the military's new top enlisted leader Veterans receiving disability payments might have been underpaid, IG finds Guam barracks conditions are 'baffling,' Navy admiral says in email Navy fires admiral in charge of unmanned systems office after investigation The Pentagon wants troops to change duty stations less often
Yahoo
29 minutes ago
- Yahoo
Council of Yukon First Nations, AFN to combine leadership roles into 1
Yukon First Nations have decided to unify a couple of regional leadership roles into one — meaning the next grand chief of the Council of Yukon First Nations (CYFN) will have some new responsibilities. Starting in October, the Assembly of First Nations (AFN) will no longer have a Yukon regional chief who's independent of CYFN. That person's duties and responsibilities will be taken up by the next CYFN grand chief. The two organizations began discussing the idea since last year and both passed resolutions last month to make it happen. The goal, according to a joint news release on Wednesday, is to "streamline governance, reduce duplication and strengthen national and political advocacy grounded in the shared priorities of all 14 Yukon First Nations." Currently, Yukon is represented at the AFN — an Ottawa-based national advocacy group — by Yukon Regional Chief Kluane Adamek, who has served in that role since 2018. CYFN is a non-profit political organization based in the territory that represents and advocates for Yukon First Nations, with the grand chief serving as the main political spokesperson. Peter Johnston has held that role since 2016 and has said he won't be running for another term. Under the new model, the CYFN grand chief will now represent Yukon First Nations at AFN executive meetings. However, that person "will not lead an AFN portfolio or sit on the AFN corporate board without a direct mandate from Yukon First Nations," reads Wednesday's news release. "This approach reflects a made-in-Yukon solution — directed by all 14 Chiefs — that aligns with regional governance realities while maintaining a strategic national presence." The next grand chief of CYFN will be elected this month. They would take on the new AFN-related responsibilities as of Oct. 1. In a written statement, Johnston called the change "a significant step forward in unifying our effort and advancing the interests of all Yukon First Nations." Adamek also touted the decision as a way to ensure Yukon First Nations have a stronger voice through "co-ordinated advocacy." "This is about amplifying the collective voices of all Yukon First Nations in a way that reflects who we are: united, visionary and rooted in our values," she said.
