Arizona Industrial Real Estate: 2025 Investor Playbook

Why Arizona industrial belongs in a diversified portfolio and how investors can

participate.

Overview

Industrial real estate—think logistics, distribution, cold storage, and last-mile facilities—has become a core allocation for

both institutions and sophisticated individual investors. Arizona sits at the crossroads of West-coast demand and business-friendly operating costs, making the Phoenix metro a natural hub for e-commerce and manufacturing.

Why Arizona Works

• ➤The strategic location on the I-10/I-17 corridor offers significant logistical advantages, providing seamless access to major transportation routes across the southwestern United States. This facilitates efficient movement of goods and enhances supply chain management.

• ➤Proximity to California ports allows companies to leverage extensive shipping capabilities without the high costs and complexities of operating in California. This includes lower operational expenses, reduced regulatory burdens, and a more favorable business environment, enhancing profitability and efficiency.

• ➤ In short, Arizona's strategic location on key transportation corridors and combined with the ability to avoid California's challenges makes the region attractive for optimizing logistics and expanding market reach.

How Returns Are Created

• Contracted rents from creditworthy tenants.

• Annual rent bumps and mark-to-market on lease rollover.

• Operational upgrades (lighting, yard, dock packages) that enhance NOI.

• Capital-market tailwinds realized at refinance or sale.

Underwriting Checklist (What We Insist On)

• Submarket supply pipeline and absorption vs. your lease-up assumptions.

• Tenant credit profile and lease term; avoid single-tenant binary risk unless priced in.

• Clear loading specs (dock-high/grade), parking/yards, and trailer counts.

• Power capacity and zoning; expandability is a hidden option value.

• Debt terms: fixed rate or rate-capped; DSCR >= 1.25x (stressed) and exit cap buffer >= 75-100 bps.

Risk Controls

• Avoid short-term momentum buys; focus on transportation-advantaged micro-locations.

• Structure leases with true NNN pass-throughs and annual bumps.

• Maintain prudent leverage and reserves for roof/parking/tenant improvements.

How Investors Participate (Simplified)

Typical structures provide a preferred return (usually between 8-10%) drawn from cash flow, followed by a sponsor/investor profit division after reaching that threshold. The intended holding periods generally span 3-7 years, with value realization occurring through refinancing or sale.

What We Do at The Standard

We acquire and manage vacant commercial properties in Arizona, converting them into multifamily housing with institutional precision. We employ conservative debt, thoroughly vetted financial models, and proactive asset management to minimize risks and enhance value.