Published October 22, 2024
TSMC jump starts housing, business development in north Phoenix
TSMC jump starts housing, business development in north Phoenix
By Corina Vanek
The cranes, visible from miles away, loom over a massive microchip "fab" taking shape in the desert near Loop 303 and Interstate 17.
But far more is happening in the North Valley beyond the Taiwan Semiconductor Manufacturing Co. plant, the engine driving much of that change. The factory is bringing such a ripple effect that it's single-handedly shaping the local housing market. It's boosting demand for housing and services, which are already in short supply.
To meet that demand, a new community is springing up around TSMC. The area has enough land already zoned to accommodate more dwelling units than already exist in Tempe.
The Maricopa Association of Governments mapped a planning area around TSMC that stretches from Anthem to unincorporated land near the White Tank Mountains, and from Lake Pleasant to portions of the northern edges of Phoenix, and parts of Glendale, Peoria, Surprise.
Some 324,551 people lived there in 2022, according to MAG data, provided by the Greater Phoenix Economic Council. Regional planners project that more than 630,000 people will live there by 2050. Total employment in the area is projected to reach about 272,000, with 208,000 of those expected to be on-site jobs.
Apartments and housing will be some of the first new developments to follow the industrial employment growth in the area, followed by retail and eventually hospitality.
The sudden rush of construction in the area led to a need to act quickly to develop the needed infrastructure, but the Valley has seen other periods of rapid growth and been able to accommodate, John Bullen, assistant executive director for the Maricopa Association of Governments, said.
"What is unique about TSMC is just the size of the facility coming in," he said. "It's a huge generator in itself and bringing a lot of additional growth."
"What is unique about TSMC is just the size of the facility coming in," he said. "It's a huge generator in itself and bringing a lot of additional growth."
Construction already outpacing past years
Since TSMC bought the land three and a half years ago, the apartment and industrial sectors experienced the equivalent of eight years’ worth of pre-pandemic growth in the 10-mile radius around the plant, according to data from CoStar, a commercial real estate information company.
Within 10 miles of the plant, about 2,500 apartment units are under construction, according to CoStar data. Since the fourth quarter of 2020, when TSMC bought the land, there has been about an 18% increase in apartment inventory in the area. About 3,500 units opened in that time, more than in the eight years preceding the purchase.
About 1.8 million square feet of industrial space is under construction within 10 miles of the TSMC plant. That's on top of the roughly 3.1 million square feet worth of industrial buildings that opened in the area since the fourth quarter of 2020, according to CoStar.
Some of those projects are directly related to TSMC, including major suppliers that have opted for locations in the Deer Valley area. Some are not related to the operations of TSMC but have chosen locations near a growing employment center.
The future looks bigger than some Valley cities
TSMC and the land around it encompass about 3,500 acres that have already been spoken for by developers and master plans. But in the area beyond, there is even more land that could eventually be built out to add nearly 100,000 housing units, according to data from Scottsdale-based land brokerage Land Advisors.
Within a 10-mile radius of TSMC's campus, there are about 17,140 acres of land already zoned to allow single-family homes, and another 2,452 acres zoned to allow apartments with an estimated density of 15 units per acre. In total, the land could allow about 96,776 units of housing, without any rezoning, according to Land Advisors' data.
According to the U.S. Census Bureau, in 2020, Tempe had 82,626 housing units, meaning the land around TSMC could have more housing than all of Tempe.
That does not include land that would need to be rezoned to accommodate development on land held by the Arizona State Land Trust. According to Land Advisors, the state land department holds about 91,770 acres within 10 miles of TSMC. However, much of that land is mountainous, preserved or otherwise undevelopable.
But state land does provide some development opportunities. The Arizona State Land Department slated about 366 acres within 10 miles of TSMC to be auctioned for future development. One of those sites, near 83rd Avenue and Happy Valley Road, goes under the hammer on Oct. 17.
Much larger sites will likely come into play soon, too.
Georgia-based homebuilder PulteGroup submitted applications to Phoenix to rezone about 6,300 acres directly south of TSMC for a development. It could include nearly 20,000 housing units, plus business parks, retail and potentially a resort.
The state land department owns that site too, though it's scheduled no auctions there. While PulteGroup is the applicant in the zoning case, the land would need to sell at public auction, meaning another buyer could place the winning bid.
Near 30th Avenue and Deer Valley Road, Minnesota-based Roers Cos. applied to rezone a five-acre site for a 147-unit affordable housing complex. Units would be affordable to people earning 60% of the area's median income. The site is about six miles southeast of TSMC. According to data from Phoenix, in 2023, a family of four earning 60% of the area's median income earned $56,100.
In the submittal, company leaders cited the growth sparked by TSMC as a reason for the increased need for new housing.
"High rental prices are due to the shortage of housing in the city generally and because of the need for housing being generated by TSMC and the secondary employment industry it is creating for suppliers to TSMC," company representatives wrote in the submittal. "All of this has created a massive need for housing, which is undersupplied."
Retail, restaurants on top of wish list
Another 190,000 square feet or so of new retail buildings are also under construction in the area. While not a remarkable increase, planners expect that number to grow quickly in upcoming years as more people move to and work in the area.
As north Phoenix's industrial and apartment development has taken off, Christine Mackay, economic development director for Phoenix, said she and her team are focusing on bringing in retailers and entertainment venues to serve the growing population.
"The rooftops and residential has gotten to the point where we can bring in the sit-down restaurants, the wine bars and the microbreweries that they want, and new entertainment to the area," she said.
The ripple effect, even for retail, has extended beyond Phoenix, she said, pointing at Din Tai Fung, a world-renowned Chinese restaurant opening at Scottsdale Fashion Square.
The 808 Union Hills Plaza, purchased by Lee Chi Investment Group, is slated for Asian businesses, like restaurants and entertainment.
Some Asian grocery stores are also going to be announcing locations in the area soon, she said.
"TSMC has put Phoenix on the international stage where it's never been before," she said.
Some new retail development is already starting to take shape in the area. Thompson Thrift is under construction on Pointe 17, located at 29th Avenue and Dove Valley Road.
Restaurants, including Oregano's, Handel's Ice Cream, Over Easy, Foothills Grille and Pepper Lunch have already signed leases at the retail portion of the project. That development also includes a luxury apartment complex.