Not long after Taiwan Semiconductor Manufacturing Co. announced its decision to build a $12 billion factory in Phoenix, real estate firms started buying up hundreds of acres in the nearby Deer Valley submarket, which is home to one of the largest job corridors in Phoenix and spans more than 50 square miles.
New York-based Mack Real Estate Group, for example, purchased 224 acres near the Phoenix Deer Valley Airport to develop several million square feet of industrial space at Mack Innovation Park — it's one of the largest industrial projects proposed for the area in recent years and is also a designated site for semiconductor suppliers.
Following the developer's proposal, Taiwan-based Sunlit Chemical was one of the first TSMC suppliers to announce plans for a large facility in the Mack Innovation Park and recently started construction on its $100 million hydrofluoric acid plant only several miles east of the chipmaker.
With thousands of new homes and commercial space also poised to support the new semiconductor factory, known as a fab, and burgeoning technology corridor in north Phoenix, real estate experts say the planned chip facility has changed the landscape for the industrial market in Deer Valley, with numerous semiconductor-related tenants and small-to-large industrial buildings in the works.
“As of 14 months ago, we started seeing the uptick in suppliers calling us that are going to be part of the TSMC plant," said Chris Rogers, an executive vice president with DAUM Commercial Real Estate Services. "At first we didn’t think it was going to be as significant as it became, but that’s been a big bolster to that market. Lots of companies are coming from out of state, as small as 3,000-square-foot suppliers to as large as 250,000-square-foot suppliers."
The north Phoenix area comprises about 200,000 residents, three large freeways, Sonoran desert land and several large employers all located north of Cactus Road between Peoria and Scottsdale. Between residential and commercial development, the city of Phoenix estimates that about $750 million in building permit activity occurred in its Deer Valley and north Phoenix villages in 2021.
Driven by the state's fast-growing semiconductor and industrial sectors, the area currently has several million square feet of industrial space across dozens of buildings that are proposed or under construction, but experts say there's limited land and warehouse space left in the submarket, which has seen an uptick in costs and pushed growth to other parts of the Valley.