Arizona land market evolves as technology drives demand

Shortly after Arizona was admitted into the Union, the U.S. government placed 10.9 million acres in a perpetual land trust to support the development of public institutions in the fledgling state. The Arizona State Land Department (ASLD) manages this portfolio on behalf of 13 beneficiaries, the largest being K-12 public education. Throughout fiscal year 2026, the agency reports it generated $817.7 million in total revenue, with nearly 85% coming from auctions.

As Arizona positions itself as the industrial powerhouse for the AI era, the price, location and availability of parcels will have an outsized impact on how development occurs — and where. Here are the trends experts are seeing in the land market.

Market movements The Greater Phoenix metro spans 14,587 square miles — a large enough area to fit the entirety of New Jersey and Connecticut with room to spare. But development tends to concentrate around a central location before sprawling outward, which is why Anita Verma-Lallian, founder and CEO of Arizona Land Consulting, says the West Valley continues to see strong demand.

“Large-scale users need room to grow, and there simply aren’t many places closer to the urban core where you can find that kind of scale anymore,” she explains.

Verma-Lallian expects development to march westward, pushing the traditional development boundaries as the Valley continues to grow. These emerging corridors, she adds, are “becoming increasingly viable for major employment centers, industrial projects and thoughtfully planned mixed-use development.”

Where a site is positioned within a region has long been the driving force for real estate, but the equation is changing. Today, Verma-Lallian sees infrastructure is overtaking “location, location, location” as the primary factor influencing where development occurs.

“A property can be incredibly well positioned geographically, but if you can’t solve for power, water, sewer and transportation, that location only gets you so far,” she explains. “We’re evaluating those factors much earlier in the acquisition process than we have historically.”

Art Rullo, associate director of investments for Marcus & Millichap, notes that shovel-ready sites are attractive and mitigate risk, but developers still need to balance that against the price point.

“It all comes down to the numbers,” he continues. “Nobody will pay a premium just because the land is entitled.”

Infill development is popular because it allows users to be more centrally located and typically has the infrastructure already in place. Still, Mike Farrar, associate director of investments for Marcus & Millichap, recalls an infill project that required the extension of a sewer line about a half mile, which added “several millions of dollars” of cost to the development.

There is a difference, however, between identifying where growth is headed versus simply betting that it will eventually arrive.

“Investors are still willing to be early, but I think they’re much more disciplined now,” Verma-Lallian says. “We want to see a realistic timeline and identifiable path for the things necessary to make a project viable. If those pieces are purely hypothetical, that’s where being early can become speculative.”

WESTWARD EXPANSION: As Greater Phoenix continues to attract large industrial users, Anita Verma-Lallian, founder and CEO of Arizona Land Consulting, expects the West Valley to remain in high demand. “Large-scale users need room to grow,” she says, “and there simply aren’t many places closer to the urban core where you can find that kind of scale anymore.” (Photo licensed from Adobe Stock) Technology impacts demand The influx of data centers, semiconductor suppliers and advanced manufactures into the Valley has introduced “an entirely different scale of demand” into the market.

“When users are looking for hundreds or even thousands of acres, it can dramatically change the highest and best use of a property,” Verma-Vallian explains. “Land that may once have been evaluated primarily for residential or traditional industrial development can suddenly have a very different value proposition because of the type and scale of users entering Greater Phoenix.”

During the opening years of the decade, Verma-Lallian says that the volume of capital chasing land meant properties moved incredibly quick, but the less chaotic pace of 2026 allows developers to be more strategic.

“We’re seeing more opportunities to step into stalled projects, revisit an outdated business plan or reposition a property for a completely different use,” she continues. “For us, those complicated opportunities can be particularly interesting because there’s an ability to create value by solving problems, rather than simply relying on the market to appreciate.”

Farrar adds the cost of financing and construction can make moving forward with a previously promising development no longer viable.

“Last year, we saw that a lot with build-to-rent product,” he continues. “The rents just weren’t there, and many of these projects were fractured or put back on the market.”

Looking ahead, Verma-Lallian says that the next year or so will reveal which projects are actually executable versus largely conceptual.

“Greater Phoenix continues to attract significant investment, but I think we’ll see an increasing premium placed on certainty and execution,” she adds. “The developers who can navigate the complexity and actually move projects forward will be very well positioned.”

Staying nimble As an Arizona native, ABLA President Andy Baron has seen the Valley change drastically throughout his lifetime. Costs were lower, but the bigger difference from 20 years ago to today is the mindset of developers.

“When I started my first business in 2005, the market was all about ‘bigger is better,’” he explains. “It was almost a race to see who could set the next trend or build the next giant project.”

Baron points to Anthem in North Phoenix as an example showcasing how strategy has shifted. The developer invested heavily in community amenities “before they even sold a house,” he says.

“Now, everything is much more calculated. We can’t spend that much money up front because costs are so much higher,” Baron continues. “What’s really changed is positioning because [Greater Phoenix] is a much more mature marketplace today.”

Knowing what changes may come as the Valley continues to grow is impossible, which is why Baron is a proponent of developing with long-term flexibility in mind. Good long-term planning, he says, is about knowing which decisions need to be made right now and what can be figured out later.

Some projects are small enough that this preparation isn’t needed, but others — like the Teravalis master-planned community ABLA is working on — need to have a strategy in place.

“There’s going to be 130,000 houses built in Teravalis over a 100-year timeline,” Baron says. “I’ve been doing this awhile, but there’s no way I can predict that far out.”

Still, there are ways to prepare for the inevitable adjustments that will be needed, and that starts during the entitlement phase.

“We work with the municipalities to pin down the things we know are important today: circulation, infrastructure, drainage, connectivity — all things that matter for us to create a quality master plan,” Baron continues.

Other aspects, such as development standards, aren’t as pressing and can wait until that portion of the master plan is under construction.

“We can’t make permanent decisions around planning larger site since market conditions are somewhat temporary over a long period,” he concludes. “Think about the development trends we’ve seen just in the last decade. We can only effectively plan three to five years out. Beyond that, it’s tough.”

Arizona land market evolves as technology drives demand

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