Empty office space in downtown Tempe is slowly refilling with businesses, signaling developers to plan new buildings in the area.
High-rise buildings in downtown Tempe, which house businesses like Microsoft, have recovered rapidly since the end of the recession and are near capacity after occupancy hit its lowest point in 2009, said Kris Baxter-Ging, the city’s spokeswoman.
Hayden Ferry Lakeside, a business complex on Rio Salado Parkway near Tempe Town Lake, is at 94 percent occupancy, according to a March 13 City of Tempe news release.
Papago Gateway Center, a business complex also near Tempe Town Lake, is at 80 percent occupancy, according to the news release.
Scottsdale development company Sunbelt Holdings bought Hayden Ferry Lakeside from SunCor, a Phoenix-based development company, two years ago.
On Tuesday, Ryan Companies US, Inc. announced it would purchase a piece of the Hayden Ferry Lakeside property to build a 10-story office building.
The limited office space still available is not ideal for large companies looking to occupy multiple floors, said Jimmy Cerracchio, vice president of business and consumer outreach for Downtown Tempe Community, a nonprofit group working with the City of Tempe to improve Mill Avenue.[CS1]
“When you look at what’s going on nationwide, we’re one of the most attractive places to be at this point,” Cerracchio said.
Tempe experienced a slow point in filling vacancies in 2008, but things have really turned around, Cerracchio said.
“It’s actually filled up quite quickly over the last few years,” Cerracchio said.
The vacancy rate of retail space in downtown Tempe has fallen as well, Cerracchio said.
In 2009, downtown Tempe had a 32 percent vacancy, whereas today, its vacancy is at 20 percent, according to the release.
Forty-eight restaurants and retail businesses moved into downtown Tempe’s vacant spaces, but the city wants to see another large tower, Cerracchio said.
Technology consulting firm Statera, social media marketing group Xhibit and financial services company Silicon Valley Bank are in the process of moving into Hayden Ferry Lakeside offices, occupying much of the remaining space.
Statera will host its grand opening at Hayden Ferry Lakeside on March 29.
Xhibit is in the process of updating its space and Silicon Valley Bank expects to open its Tempe office in the summer of 2012.
Tempe is a technology-based city that attracts like-minded companies, Cerracchio said.
In response to the demand, some commercial complexes are converting retail space into office space.
Commercial complex Centerpoint on Mill occupies three city blocks on the corner of University Drive and Mill Avenue with tenants ranging from P.F. Chang’s China Bistro to the Bright Horizons Children’s Center.
Planned by Scottsdale developer DMB Associates, Centerpoint plans to convert its second floors to office space.
Despite increased retail space occupancy in Tempe, the city wants to encourage large-scale employers to move downtown, Cerracchio said.
Silicon Valley Bank currently has a small office with three employees on East Broadway Road, but the company wanted a place where it could expand its operation globally, said Carrie Merritt, Silicon Valley Bank spokeswoman[CS2] .
Silicon Valley Bank’s expansion includes incorporating a few hundred employees into the company’s Tempe office over the next few years, Merritt said.
To accommodate such a large employee-base, the company wanted an affordable space close to amenities in a centrally located, low-cost city, Merritt said.
“We’re looking at a new space for a good number of people,” Merritt said.
The company will be filling several finance and information technology positions in an area where it has access to qualified people, Merritt said.
The Valley has a high concentration of financial-minded professionals, she said.
Tempe Mayor Hugh Hallman advocated businesses moving to Tempe in the city’s news release.
“To continue to prosper as a city, we need to have office space available for the companies that want to make Tempe their home,” Hallman said.
Reach the reporter at michelle.peirano@asu.edu
