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

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.

'Supplier sites,’ related technology to cluster around TSMC

The most active developer in the area around TSMC is the New York-based Mack Real Estate Group. The company bought the sites that Phoenix designated “supplier sites” for TSMC in 2021 and 2,340 acres of land immediately surrounding the TSMC site in May.

That land had been part of the zoning case that included TSMC. The site, which the city dubbed the “Sonoran Oasis Science and Technology Park,” was divided into different designations, called “technology park” and “freeway mixed-use” depending on the permitted uses.

Mack and its partner, McCourt Partners, can develop 600 acres of the site, per the terms of the agreement. That means other developers could buy much of the land and accelerate the project.

The land purchase carried a notable risk, Richard Mack, CEO of Mack Real Estate Group, said.

The site does not have much infrastructure, so the developer would be responsible for adding it. During the process of preparing the site for sale at an Arizona State Land Department auction, interest rates surged, making financing more expensive.

It was also unclear at the time how much external development TSMC would need for its ecosystem, he said. TSMC bought about 1,100 acres, giving the company space to develop large-scale facilities without other sites supplementing it and enabling it to locate suppliers on its land.

However, his company saw the “once-in-a-lifetime opportunity” to be near TSMC, and even though there was risk involved, it decided to move forward with the purchase.

Since buying the land, Mack has also been in touch with various suppliers to TSMC and would like to potentially co-locate an engineering school and fabless chip designers on the site.

“Right now, most cutting-edge design doesn’t happen in Arizona, or in Taiwan, so this could really be a game-changer,” Mack said.

Mack and McCourt will decide based on market demand which portions they develop themselves versus what they sell to other developers and businesses to build, he said.

Mack’s and other developers' projects on that site could add up to about $7 billion worth of development and about 28 million square feet of buildings.

The growth has spilled over the Phoenix city limits into nearby Peoria. Semiconductor industry suppliers have already begun claiming land in the Vistancia area of north Peoria, and the city is working toward a master plan for the Arizona State Land Trust land.

That land must sell at public auction before it can be developed, but totals thousands of acres in the city limits. In September, the Peoria City Council approved general plan amendments to facilitate major developments in the area.

Some major semiconductor industry suppliers have already chosen Peoria. Amkor is developing its $2 billion packaging plant, a 500,000-square-foot facility, on 56 acres near Vistancia Boulevard and El Mirage Road.

Mackay said there has never been any project to land in Phoenix with a larger economic development impact than TSMC. Suppliers to the company have chosen to locate around the Valley and into Pinal County, spreading thousands of new jobs across the region.

"You've never seen so many cities get such a massive windfall, because these suppliers are not little, tiny companies, they are huge companies, and it really benefits us all," she said.

In the first few years after TSMC announced its plans, her office spent much of its time finding existing buildings or locations suitable for new development to locate suppliers, she said. Since then, more of that work has shifted to helping companies with any technicalities or other issues the city can manage. But there are still new companies eyeing the market, she said.

In one week in late September alone, she spoke with three new TSMC-related businesses.

And that momentum isn't slowing. The area north of Loop 101 in Phoenix could have room for other major users, she said. Three or four other corporations are eyeing north Phoenix for potential headquarters.

"If I had another 20 years in my career, I could be busy in the north Phoenix area the whole time," Mackay said.

What’s next? A hotel is on the ‘must have’ list as travel increases

Mack executives have traveled to Taiwan with TSMC leaders and seen what its needs and desires are.

“We know that TSMC and the people they do business with are responsible for a large number of room nights in hotels in the Phoenix market,” Mack said. “TSMC would like to be able to bring people closer to them, so we’d like to get TSMC a hotel sooner rather than later. They’d like to have meeting space, food, hospitality and entertainment for employees.”

Mackay said the city is working to get a nonstop flight from Phoenix Sky Harbor International Airport to Asia to better facilitate travel for TSMC-related activities, as well as for families from Taiwan and elsewhere in Asia.

Peoria has also floated the idea of an airport in the city's northern reaches as a way to increase commercial activity in the city and support the semiconductor ecosystem.

The proposed airport in Peoria would not be a commercial airport and would cater to small or mid-sized business jets, according to a fact sheet from the city. A specific site for the airport has not been selected, and the city is still studying the feasibility of the project, which would cost about $150 million to develop.

"Never in my entire career have I ever had a project with such a large ripple effect," Mackay said.

This is one of a series of articles about Taiwan Semiconductor Manufacturing Co. and the growth of the semiconductor industry in Arizona.

Final Thoughts

The transformation of North Phoenix, driven by TSMC's semiconductor plant, is a game-changer for both the local economy and the housing market. With new communities, business developments, and infrastructure projects sprouting up in response to this massive investment, the area offers exciting opportunities for those looking to relocate to Arizona. For anyone moving from out of state, North Phoenix is shaping up to be not just a place to live, but a dynamic hub of growth, innovation, and quality of life.