INDUSTRIAL TO WATCH
CONOR COMMERCIAL
Sven Tustin, Executive Vice President Derek Buescher, Senior Development Manager
Conor Commercial has gained success nationally as a developer in all major regions, and it doesn’t stop in Phoenix. Leading the company’s development team is Sven Tustin, executive vice president, and Derek Buescher, senior development manager. With industrial projects keeping them busy in the Valley, Tustin and Buescher predict continued success in the industrial space.
PROJECT TO WATCH
Lotus Project is one of Conor Commercial’s most successful multitenant industrial projects recently. In 2018, Conor purchased the 53-acre property from the city of Chandler, which had intended to use for a water treatment facility. High-profile advanced manufacturing tenants were attracted to the project’s infill location at the intersection of the Loop 202 and I-10 freeways, proximity to a strong skilled labor employment base, and specialized design. Conor also emphasized enhanced building and landscaping aesthetics, recognizing that companies tend to focus on buildings that complement their brand, differentiating the company’s projects from typical industrial buildings. The combination of a great roster of long-term tenants with a favorable capital markets environment allowed Conor to sell the first phase of Lotus in March, well ahead of schedule and at values in excess of the company’s initial projections—a true success for Conor, its partners, and the community. CEM: There have been predictions that the industrial sector will continue to have unprecedented growth in 2022. What are your thoughts? ST: We agree that the industrial sector will continue its record-setting growth. Prior to COVID-19, changes in consumer behavior regarding e-commerce was already propelling industrial demand to
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Sven Tustin, Derek Buescher
new heights. COVID’s effect on industrial demand is even more pronounced in four areas: 1. E-commerce: Consumers’ reluctance to shop at traditional retail venues further increased the popularity of e-commerce, driving the need for more last-mile delivery facilities. 2. Logistics: The previous just-in-time logistics model relied on a lean inventory with predictable demand, but recent product shortages forced retailers to increase inventories, which require more warehouse space. 3. Supply chains: The disruption on foreign manufacturing exposed a major weakness in domestic supply chains, causing an uptick in U.S.-based manufacturing facilities. 4. Warehousing: Residential preferences are rapidly changing as people embrace remote working, driving population growth in desirable markets such as Phoenix, which in turn increases local consumption and creates more demand for warehousing. CEM: What are you excited for post-pandemic in the industrial space? DB: The pandemic really accelerated the widespread adoption beyond Gen X and Millennials of e-commerce for daily essentials. As consumer expectations shift and we become more accustomed to the convenience of delivery, I believe post-pandemic we are going to see an accelerated adoption of online grocery delivery and the industrial infrastructure needed to store temperature-sensitive goods. Brick-and-mortar grocery stores are only just beginning to restructure their
Lotus Project
supply chains to meet the demand of online sales and grocery delivery. CEM: What’s in store for your industrial team/company that the industry should watch for? ST: With our recent success leasing and selling both Airport 40, a 320,000-square-foot infill project leased to a major e-commerce company, and the first phase of Lotus Project, we will continue to concentrate our focus on infill industrial development suitable for lastmile distribution and advanced manufacturing. Given the lack of available land within urban area, most of the last-mile sites are either adaptive reuse or redevelopment of improved properties, which all come with greater degrees of complexity that greenfield development often lacks. While these projects are more demanding, the scarcity of supply and increasing demand for them makes them compelling development opportunities. © MPmedia, LLC 2021