The Valley's first speculative office building in more than two years is being constructed in Chandler, where vacancy rates have plummeted in spite of the shaky economic recovery.
The building will go up along the Price Corridor, where the city has seen a boom in technology-related activity. That growth includes the $5 billion expansion at the Intel Corp. microprocessor facility that President Barack Obama visited in January to highlight his economic growth initiatives.
Workers broke ground in recent days on the roughly 92,000-square-foot building at the northeast corner of Price and Willis roads. The San Diego-based Douglas Allred Company is developing the project next to other buildings it's developed at Allred Park Place.
The construction represents a milestone in Chandler's recovery, said economic development director Christine Mackay. The city's office vacancy rate peaked at 25 percent in January 2010 but is now about 8 percent.
"I'm stunned, I have to be honest," Mackay said. "In my wildest dreams, I did not think that we'd improve our vacancy rates as quickly as we did."
This is the Valley's first speculative office building since the final quarter of 2009, according to CBRE, which is marketing the project.
Valleywide, about 25 percent of office space is vacant.
Chandler was hit hard in the real estate crash because several large office buildings were being built when the real estate market crashed, Mackay said. But the Price Corridor that runs through Chandler and Tempe now has some of the lowest vacancy rates in the Valley at about 8 percent, Mackay said. In one major deal, Ebay leased a vacant 190,000-square-foot building. Mackay credits the area's success to its freeway access, the brokers who focus on the area, and the city not cutting its economic development department to save money in the recession. Some other deals for vacant offices are in the works, Mackay said. If they come to fruition, she expects to see more office construction this year to meet demand.
"We're hearing from some developers that they're feeling the exact same way, that they think it's the right time to come out of the ground with office buildings," Mackay said.
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