​Driven by the underlying strength of the local and national economy, greater Phoenix absorbed a record 10 million square feet of industrial product in 2017. While vacancy rates are near all-time lows as a result of continued strong net absorption, rental rates and building sale prices have yet to surpass prior cycle levels (for the most part), providing a tremendous opportunity from a development perspective. We're excited to be delivering some groundbreaking industrial projects that meet the needs of end users and investors.
Increasing Specs Yield High-Quality Buildings
In our area, we're seeing tenants and institutional owners provide increasingly particular building specifications that result in higher-quality projects. For example, it's becoming more common to find upgrades not seen in prior cycles, including 100% fully-secured concrete truck courts, 2% skylights, thicker insulation and more robust roof membranes, built-out spec offices and walls painted white in the warehouse.
We're more than willing and capable to accommodate these needs. In addition to having specific expertise in the
development of industrial properties, our
design-build delivery model leverages our in-house development, design and construction expertise to offer tenants and owners superior build-to-suit projects at a more economical price. We also have a history of developing speculative projects and can leverage a deep brokerage and consultant network to locate the best land sites and position the project for success.
Focusing on Submarkets Generating Outsized Absorption
We are primarily targeting Phoenix's Southwest, Airport and Southeast Valley submarkets due to strong continued absorption, low vacancy rates and rising rents. A robust infrastructure system with multiple freeways, a skilled and affordable workforce and pro-business environment define these areas. The Southwest submarket is ideally positioned to serve Arizona's seven million people and Southern California's 23 million people with a good mix of small bay buildings and a high concentration of mid- and large-box industrial buildings. We recently
completed and leased our first building at Goodyear Crossing Industrial Park and began construction on a new manufacturing facility for Andersen Corporation. Combined, these buildings total 1.1 million square feet and exemplify our capabilities of speculative and build-to-suit development.
While more land constrained, the Airport and Southeast Valley submarkets provide a quality supply of small- and mid-size industrial buildings to accommodate a broad range of tenants. With steady demand in these submarkets, we've developed two speculative projects.
Opus Airport Industrial, a 393,300-square-foot warehouse and distribution center located near Sky Harbor International Airport, was sold not long after completion to an institutional investor. And we recently completed
Longbow Gateway One, an efficient and highly-designed 150,000-square-foot spec building, in the Longbow Business Park in Mesa.
We intend to continue to leverage our historical success in the speculative space, so long as the market fundamentals continue to support it, which we expect will continue to be the case in the short and mid-term. Additionally, we will continue to closely monitor the local and national tenant base for build-to-suit opportunities. Since 2010, we have developed 9.78 million square feet of speculative industrial projects and 6.53 million square feet of industrial build-to-suit projects nationally.