- Panattoni bought the 25-acre former State Farm regional headquarters in Tempe and secured approval to redevelop the site into a two-building industrial project.
- The property currently includes 462K SF of office space, but most of the campus will be converted while retaining two parking garages with 858 spaces.
- Phoenix continues to emerge as one of the country’s busiest office conversion markets, fueled by industrial demand and rising office obsolescence.
According to Bisnow, Panattoni is moving ahead with another office-to-industrial conversion in metro Phoenix after acquiring the former State Farm regional headquarters campus in Tempe for $37.5M. The California-based developer plans to transform most of the 25-acre site into a two-building industrial project as demand for logistics and advanced manufacturing space continues reshaping the Valley’s commercial real estate landscape.
The Tempe City Council unanimously approved the redevelopment proposal, according to AZ Big Media. The property sits near Priest and Alameda drives, adjacent to Broadway Industrial Park and a short distance from Arizona State University’s main campus.
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Phoenix Office Conversions Gain Momentum
The State Farm campus redevelopment adds to a growing pipeline of obsolete office repositionings across metro Phoenix. According to a 2026 Cushman & Wakefield report, developers have converted or removed roughly 3.3M SF of office space across 37 buildings since 2024.
Another 4.1M SF of unused office product is currently proposed for conversion or demolition, per Cushman & Wakefield, placing Phoenix among the nation’s most active adaptive reuse markets. Developers have increasingly targeted aging suburban office campuses with large footprints and strong freeway access for industrial redevelopment opportunities.
The Details
The Tempe property currently contains about 462K SF of office space and two structured parking garages. Panattoni’s redevelopment plan preserves the garages, which together provide 858 parking spaces, while replacing the remaining office structures with industrial facilities.
Phoenix-based JDM Partners sold the property, while Newmark brokered the transaction. Panattoni also plans to add significant electrical infrastructure to the site, signaling potential appeal to advanced manufacturing, semiconductor suppliers, or other power-intensive industrial users.
The location gives the project direct access to some of metro Phoenix’s most active employment and logistics corridors. Its proximity to Arizona State University may also support labor access for future industrial tenants tied to technology or semiconductor supply chains.
Industrial Demand Keeps Phoenix On Top
The redevelopment comes as Phoenix continues outperforming most US industrial markets despite elevated supply levels over the past two years. According to Colliers, Arizona attracted more industrial investment dollars than any other state in 2025.
Major projects continue driving demand across the metro area, including Taiwan Semiconductor Manufacturing Co.’s ongoing north Phoenix campus expansion. Developers also recently delivered Phase 1 of Park Algodon, a $250M industrial and mixed-use project expected to total 1.3M SF along Loop 101. The investment surge has helped Phoenix emerge as one of the country’s top industrial capital markets, even as other property sectors face softer investor demand.
At the same time, market fundamentals appear to be stabilizing after a wave of speculative industrial construction. Colliers reported Phoenix industrial vacancy fell to 9.2% in Q1 2026, down from 11.2% a year earlier, marking the fourth consecutive quarter of declining vacancy.
Why It Matters
The State Farm redevelopment highlights how Phoenix’s industrial growth is reshaping land use priorities across the metro area. Aging office campuses that once housed large corporate users are increasingly viewed as redevelopment plays rather than long-term office investments.
The trend also reflects broader shifts in occupier demand. Industrial users tied to manufacturing, logistics, and semiconductor supply chains continue absorbing well-located sites with infrastructure capacity, while many suburban office properties face weaker leasing fundamentals and higher capital needs.
For developers, office-to-industrial conversions can offer a faster path to entitled industrial land in supply-constrained infill locations. That dynamic has become especially valuable near major transportation corridors and employment centers like Tempe.
What’s Next
Panattoni will now move into the redevelopment and construction planning phase for the Tempe project. Market watchers will be looking closely at potential tenant interest, particularly from semiconductor suppliers and advanced manufacturing firms expanding alongside TSMC’s Arizona operations.
More office repositioning deals are likely across Phoenix over the next 12 to 24 months as owners evaluate underperforming suburban campuses. If industrial fundamentals remain stable and vacancy continues tightening, additional office assets could follow the same redevelopment path.
