Mack Real Estate Group Affiliate Prevails at Auction for 2,300+ Acres at Taiwan Semiconductor Campus in Phoenix

Rhea-AI Summary

Biscuit Flats Dev, an affiliate of Mack Real Estate Group (MREG), won the auction for 2,300+ acres adjacent to TSMC's semiconductor campus in Phoenix, Arizona. The Arizona State Land Department awarded the rights for a $7+ billion development project, involving over 28 million square feet of mixed-use spaces, including industrial, residential, retail, and office areas. McCourt Partners will co-invest in this joint venture. TSMC’s $65 billion investment in its Phoenix campus, potentially expanding to $120 billion, is expected to create thousands of jobs, significantly boosting local real estate demand. MREG’s existing projects in Phoenix include industrial and multifamily developments. The site’s proximity to TSMC’s campus and the anticipated economic growth are expected to benefit from federal and state support, including the CHIPS Act and the Inflation Reduction Act.

Positive

• Secured 2,300+ acres adjacent to TSMC’s $65 billion semiconductor campus.
• Planned $7+ billion mixed-use development.
• Development capacity includes over 28 million square feet.
• Project benefits from federal support via the CHIPS Act and Inflation Reduction Act.
• Significant investment commitment from McCourt Partners.
• TSMC’s expansion could potentially reach $120 billion.
• Proximity to TSMC’s facilities expected to create high real estate demand.
• More than 80,000 jobs could be created by the TSMC ecosystem in Phoenix.

Negative

• High capital expenditure required for $7+ billion development project.
• Dependence on TSMC’s future investments and economic stability.
• Risks associated with long-term infrastructure and construction phases.
• Potential delays in land sales and development stages.

Insights

Financial Analyst

The acquisition of development rights for over 2,300 acres adjacent to TSMC's semiconductor campus is a major event. This signals a substantial increase in capital expenditure and future returns. The $7 billion mixed-use development indicates a long-term commitment to the region, leveraging TSMC's $65+ billion investment. The projected creation of 80,000 jobs could drive demand for commercial and residential properties, potentially raising property values and rental incomes.

The involvement of McCourt Partners adds credibility and expertise, enhancing the prospects for successful development. However, investors should consider the timeline and potential delays in such large-scale projects. The phased land sales and infrastructure improvements will require significant upfront capital, while returns may take years to materialize.

Moreover, the projected benefits from federal and state funding via the CHIPS Act and Inflation Reduction Act provide a favorable backdrop. The $6.6 billion grant to TSMC further solidifies the project's foundation. Investors should monitor developments closely to gauge MREG's execution capabilities and any external risks affecting the semiconductor industry.

Market Research Analyst

The partnership between MREG and McCourt Partners is a strategic move, especially given the booming demand for semiconductor manufacturing. The location's proximity to TSMC's campus offers a competitive edge, ensuring high demand for the mixed-use space. The scale of development, with over 28 million square feet planned, suggests a transformative impact on the local real estate market.

This project aligns with the broader trend of semiconductor reshoring, driven by geopolitical tensions and supply chain disruptions. The reliance on local suppliers and workforce development initiatives will likely create a stable ecosystem, attractive for long-term investments. Residential units and commercial spaces near such a high-tech hub could see sustained demand, mitigating market volatility.

However, potential investors should remain cautious of market saturation and economic downturns affecting the real estate sector. The success of this venture hinges on the sustained performance of TSMC and continued federal support for semiconductor manufacturing.

Tech Expert

The development around TSMC's semiconductor campus is noteworthy due to the critical role semiconductors play in today's tech-driven economy. TSMC's chips are foundational to innovations in AI, consumer electronics and various high-tech industries. The $65 billion investment in Phoenix, with potential expansion to $120 billion, underlines their strategic importance.

For tech stakeholders, this development means increased local capacity for advanced chip manufacturing, reducing reliance on overseas production. The proximity to TSMC will likely attract tech firms, fostering a robust innovation ecosystem. Apple’s commitment to sourcing semiconductors from Phoenix also highlights the strategic value of this location.

However, the success of this development will depend largely on the efficient integration of infrastructure improvements and the ability to attract high-tech talent to the region. The potential competition from other semiconductor hubs globally should also be considered.

Arizona State Land Department Awards Full Development Rights for Vast Site Adjacent to $65B+ TSMC Semiconductor Fabrication Campus

McCourt Partners to Invest in Joint Venture with MREG for Anticipated $7B+ Development of Over 28 Million Square Feet of Mixed Uses Including Industrial, Residential, Retail, and Office

NEW YORK & PHOENIX, Ariz.--(BUSINESS WIRE)-- An affiliate of Mack Real Estate Group (MREG), Biscuit Flats Dev LLC, has prevailed at an auction held to sell the development rights to over 2,300 acres of fully entitled land immediately adjacent to Taiwan Semiconductor Manufacturing Corporation’s (TSMC) semiconductor fabrication campus in Phoenix’s North Valley, where TSMC has committed to invest $65 billion in its rapidly growing facilities, with significant further investment anticipated. The project was awarded by the Arizona State Land Department (ASLD) to Biscuit Flats Dev LLC as winning bidder in an auction process for the right to lead what is expected to be a $7+ billion mixed-use development of more than 28 million square feet surrounding one of America’s most powerful new employment and innovation drivers, and perhaps the most indispensable company in the world, TSMC. McCourt Partners will be making a significant investment in the project in partnership with MREG.

“TSMC’s Phoenix semiconductor fabrication campus is a tremendous economic driver with local, national, and global significance,” said Richard Mack, CEO of MREG, developer of the vast mixed-use project. “TSMC is quite simply one of the most important companies in the world. TSMC produces the chips that allow for exponential innovation and for the continued development of artificial intelligence. Together with ASLD and McCourt Partners, we are privileged to help in the building of a new type of city that both supports and leverages the domestic and international digital transformation enabled by TSMC’s new semiconductor manufacturing campus. We hope that this new silicon city will serve as a model for public-private cooperation, to not only bring back high-tech manufacturing jobs to the US, but also to create the live/work environments of the future. MREG and McCourt bring extensive local knowledge, seasoned national development experience, and the benefit of federal and global relationships and we believe we are well positioned to maximize the value of this unique site.”

“A transformative project of this magnitude is an opportunity to not just contribute to, but actively drive a city’s growth,” adds Jordan Lang, President of McCourt Partners. “Our passion for building has always been with an eye to the future, and we’re excited to partner with MREG to establish essential infrastructure alongside the TSMC campus and help shape a city that fosters innovation with global impact.”

Under an agreement with ASLD, the partnership will control land sales within the site, which are to take place in stages over several years, while also overseeing the necessary infrastructure improvements. Additionally, the joint venture will have the right to develop approximately 600 acres, across multiple uses. Numbers provide the best sense of the planned scale of the overall project:

• 2,300+ acres with over 28 million square feet of development capacity across mixed uses, including up to 8,960 residential units as well as industrial, retail, and office space.
• Adjacent to TSMC’s 1,100-acre site where three semiconductor fabrication plants (fabs) are already under construction based on TSMC’s committed investment of $65 billion, and another three fabs are planned for a potential total investment in excess of $120 billion in the Phoenix facility as a whole.
• Apple, TSMC’s largest customer by revenue, has announced that it will buy semiconductors from the Phoenix fabs.
• At least 10,000 permanent jobs are expected to be created directly by the TSMC fabs, with up to 80,000 jobs created in the Phoenix MSA by the overall TSMC business ecosystem.
• Permanent jobs drive demand for commercial and residential property, with the 2,300-acre site providing closest proximity.

MREG is a real estate firm with a national development and investment footprint, including a major presence in Phoenix. In addition to the 2,300-acre site, MREG is currently building over 4 million square feet of industrial space across Mack Innovation Park Deer Valley (located within 10 minutes of TSMC and was designated as a TSMC Supplier Site by the City of Phoenix) and another large industrial site in Scottsdale. Additionally, MREG’s multifamily portfolio in Phoenix consists of more than 900 units owned or under development. Since 1987, Mack-related entities have invested in or developed more than 10 million square feet of industrial, office, retail, and multifamily properties in Phoenix. Nationally, MREG has a portfolio of more than 9,100 multifamily units and 6 million square feet of industrial space, including development and pre-development pipeline.

McCourt Partners is a full-service real estate development, investment and management firm with a portfolio of innovative development projects across the United States and around the world. The company’s experience in large-scale and complex projects dates back to its acquisition of several large parcels in Boston’s then-emerging Fort Point district. Working closely with community leaders and city officials, McCourt helped develop a masterplan for what is known today as the Boston Seaport District.

TSMC’s operations in Phoenix have already proven to be a major demand driver for real estate in the region, especially in the North Valley. Several suppliers and other companies doing business with TSMC have announced their plans to follow TSMC to Arizona, and others have already established a presence in the local market (including at Mack Innovation Park Deer Valley). The 2,300-acre site is poised to benefit from tremendous growth, considering its excellent location and the limited amount of competing space.

Significant federal and state funding has been committed to support the growth of the semiconductor industry nationally and in Arizona particularly. TSMC and its suppliers are expected to be beneficiaries of the Chips and Science Act (CHIPS Act), which will direct approximately $53 billion toward semiconductor manufacturing, R&D, and workforce development with another $24 billion worth of tax credits for chip production. TSMC’s Arizona subsidiary recently received up to $6.6 billion in grants through the CHIPS Act to support the construction of its third semiconductor fabrication plant in Phoenix, after having already committed to build the first two fabs at its campus. TSMC and other stakeholders in the semiconductor ecosystem may also benefit from the subsidies included in the Inflation Reduction Act. Arizona has also announced its plans to invest $100 million in a public-private partnership focused on building out Arizona's infrastructure, workforce and research and development for semiconductors.

About Mack Real Estate Group

Mack Real Estate Group, LLC (MREG) is an institutional real estate investment firm with roots in several Mack family real estate businesses, dating back to the 1960s. Today, MREG’s equity, credit and property management businesses employ over 250 people with offices across the US including New York, Seattle, Phoenix, Miami and Raleigh. MREG’s equity business specializes in the acquisition, development and management of multifamily and industrial properties located in gateway and high-growth markets. Its recently created portfolio, excluding legacy Mack family assets, represents approximately 9,100 multifamily units and 6 million square feet of industrial space, including development and pre-development pipeline. The firm’s affiliated credit business, Mack Real Estate Credit Strategies, L.P. (MRECS), has originated, co-originated, or acquired more than $20 billion of loans since 2015 across multiple lending strategies. An MRECS affiliate manages one of the largest publicly traded commercial mortgage REITs, Claros Mortgage Trust, Inc. (NYSE: CMTG). For more information, please visit mackregroup.com.

About McCourt Partners

McCourt Partners is a community-driven, family-owned real estate development, investment and management firm. With more than $1 billion of permanent capital, it has made significant investments in flagship projects in New York City, Los Angeles, Austin, Dallas, London and Miami. McCourt Partners endeavors to build stronger communities through inclusive space, green technology, and resilient design. For more information, visit www.mccourtpartners.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240529690572/en/

Media Contact:

Great Ink Communications, (212) 741-2977

Eric Waters (eric.waters@greatink.com)

Tom Nolan (tom@greatink.com)

Source: Mack Real Estate Group

FAQ

What is the significance of Mack Real Estate Group's acquisition near TSMC's Phoenix campus?

Mack Real Estate Group's affiliate, Biscuit Flats Dev, won rights to develop over 2,300 acres adjacent to TSMC's $65 billion semiconductor campus, aiming for a $7+ billion mixed-use project.

How much is the anticipated investment for the Mack Real Estate Group's new project in Phoenix?

The anticipated investment for the project is over $7 billion, involving the development of more than 28 million square feet of mixed-use space.

What are the expected benefits from the proximity of the new development to TSMC’s campus?

The proximity to TSMC’s campus is expected to drive high real estate demand due to TSMC’s significant investments and the creation of thousands of jobs.

How will the CHIPS Act impact Mack Real Estate Group's development project near TSMC’s campus?

The CHIPS Act provides substantial federal support for semiconductor manufacturing, which benefits TSMC and its ecosystem, thereby positively impacting the nearby development project.

Who are the key investors in Mack Real Estate Group's Phoenix development project?

Key investors include Mack Real Estate Group and McCourt Partners, who are making significant investments in the $7+ billion project.

What types of spaces will be included in the new mixed-use development?

The development will include industrial, residential, retail, and office spaces, with a total of over 28 million square feet.