Jim Keeley of Colliers International gives his commercial real estate forecast

Jim Keeley of Colliers International gives his commercial real estate forecast

By Jimmy Magahern

As commercial redevelopment surges through the Airpark, which elements are here to stay?

Wherever he looks around the Scottsdale Airpark, Jim Keeley sees things not visible to the average human eye.

“Across the street here, that’s going to be a hangar for a doctor who’s got a med evac company,” says Keeley, pointing at a vacant lot on 81st Street just south of Frank Lloyd Wright Boulevard that right now is dirt and desert brittlebush. “He’s going to put his planes in there and operate an air ambulance service. Right next door to him, there’ll be a guy who has helicopters and he does filming for movies.”

As the founding partner of Colliers International’s Scottsdale office, Keeley is used to peering into the future of the Airpark area. He’s been doing it since 1981, when he first began publishing his annual predictions in what he then called the “Greater Scottsdale Airpark 2010 Report,” eventually updated to the “2030 Report.”

Back then, there were only 268 companies employing 3,320 people scattered around the Scottsdale Airport. Today, approximately 57,300 employees work at 3,150 companies here – a number Keeley expects to grow to 4,000 over the next 12 years, creating jobs for 80,000 Arizonans. Odds are he’ll be on the money. “In my first report, I said by 2010 we’ll have 25 million square feet of building space,” he says, “and that was about right.”

His keen knack for forecasting comes in part from his nearly 40 years of experience as one of the area’s leading real estate brokers. The Colliers sign is everywhere around the Airpark, including the building Keeley’s casing today: the current 10,790-square-foot headquarters of Vault Motorsports, which Colliers is offering for a cool $2 million.

But Keeley also keeps his ear to the ground, picking up on hush-hush business dealings long before they make the business headlines. Tesla Motors, for instance, has only a small foothold in the Airpark at the moment, operating a service center on Hayden and Raintree roads and a showroom at Kierland Commons (the Palo Alto, California-based company also has another showroom at Fashion Square Mall). But Keeley has heard that the electric vehicle maker plans to significantly grow its operations in the Airpark over the next few years.

“They don’t want to talk about it yet, but they’re expanding in a bigger part of the Airpark. It’s top secret right now,” he adds, with a wink, “but I know what’s going in there.”

Keeley sometimes, sadly, also sees things around the Airpark that he knows will not be there in the future. Right now, that includes CrackerJax, the beloved 25-year-old family fun park whose land has ultimately become too valuable for batting cages, bumper boats and miniature golf.

“It’s owned by the Herberger family now, but there’s another group that has their own contract to buy it, and they’ll redevelop it.” Rumors are that group is JDM Partners, a company that includes former Phoenix Suns and Arizona Diamondbacks owner Jerry Colangelo. The partners’ lavish 155-page plan on file with the City of Scottsdale calls for an ambitious mixed-use development called La Via – the last word an acronym for Village for Innovation and Art – housing tech-oriented businesses in a large center (almost twice the size of the Scottsdale Quarter) based on “timeless plazas” in Spain, Italy and France.

“What we’re seeing is older businesses being torn down and the land redeveloped into high-density mixed-use projects,” Keeley says. “In the last four years, we’ve seen four or five of those, mainly over by the Scottsdale Quarter and Kierland. They tore down furniture stores and put in apartments, condos and office buildings.”

Asked if we’ll see another amusement park in the CrackerJax space, Keeley chuckles at the naiveté of the question. “No. This will probably be two million square feet of space, with taller buildings and more density.”

 

Projecting Mainstays

For this year’s Scottsdale Airpark report, Keeley decided to rein in his usual prognosticating to focus more on the things in the area he expects will not significantly change.

That includes the region’s main economic drivers, the Loop 101 freeway and the Scottsdale Airport, the latter in the midst of a $27 million renovation that will bring extra-large hangers to the private jet-dominated facility. Keeley also predicts the current emphasis on “live, work, play” environments will continue, as both Millennials and downsizing Baby Boomers have emphatically embraced the concept. And the roost will continue to be ruled by a handful of ultra-wealthy players.

“In last year’s report, I talked about eight billionaires who are impacting the Airpark,” he says. “They don’t want their names mentioned, but if you look at the industries that are expanding here, you can probably guess who they are.” One widely known wheeler-dealer is former GoDaddy CEO Bob Parsons (“he’s our Bill Gates,” Keeley gushes), who’s already got motorcycle dealerships, a high-end golf club manufacturing facility and a video production studio scattered around the Airpark and continues to snatch up commercial real estate in the area.

“He knows money’s like manure: If you stack it all in one place, it starts to stink,” says Keeley, with a laugh. “But if you spread it out, you see your earnings grow.”

Additionally, car collection enthusiasts – who already have over 40 different auto collections stashed in warehouses and hangers – will continue to build their fantasy “toy barns.” Says Keeley, “You can go buy these 2,500-square-foot garages and turn them into man caves. There’s three of those in the park now.”

 

Airpark Amenities Wanted

All these predictions perpetuate one unfortunate disparity of Airpark life: The area will continue to cater to lifestyles economically out of reach to many of the thousands of workers employed in the stores, industrial parks and business offices that comprise one of the Valley’s largest employment bases.

Keeley admits the Scottsdale Airport itself, one of the busiest private aircraft facilities in the nation, stands as the biggest symbol of that imbalance. “Having the airport here is great, but most of the over 50,000 employees that work here don’t interact with the airport, maybe 5 percent,” he says. “So, it’s a great amenity, a great landmark, you know. But most of the people who work here aren’t flying private jets.”

Rising land costs are also driving out some of the older business tenants. “The cost of land here is so high now that they’re not going to build any more of these multi-tenant office/warehouse spaces,” Keeley says. Again, he points to the brittlebush blowing in the wind across from Vault Motorsports. “That land sold for $30 per square foot. For industrial properties, you get about $10 per square foot. So, it’s hard to make the numbers work.”

Keeley, who also sells commercial properties in the Desert Ridge and Deer Valley areas, says the Loop 101 freeway connection between the three employment bases has led to a convenient exodus for some of the smaller property owners.

“Deer Valley is still building more office warehouse space, because their land is still $10 per square foot,” he says. “So a lot of the companies that were here, small manufacturers, as the prices increased, a lot of them moved to Deer Valley, because it’s less expensive. And what fills in for the companies leaving here are more technology-type companies – which is good.”

Keeley, whose online bio touts him as “Mr. Scottsdale Airpark,” remains an enthusiastic cheerleader for the area. But he admits some more attention needs to be paid to the employees who keep the economic engine running.

“The area that has the fewest amenities for workers is the Perimeter Center,” he says, referring to the swath of business offices sandwiched between the Loop 101 and Hayden Road just north of Bell Road. “There’s beautiful buildings up there, but there’s really no places to eat. And so all those employees that walk out the door have to get in their cars and spend 15 minutes just getting across the canal and back to find a place to eat lunch. That’s why the Perimeter Center has higher vacancies than other parts of the Airpark.

“But there’s more restaurants coming, in time,” Keeley adds. “That’s one thing that will change.”