Lego's Big Bet on Tempe: What This Bold Expansion Means for Real Estate Investors

The Lego Group is making waves with its latest move to expand its U.S. presence—and it's not just about building blocks. This is a calculated real estate strategy that presents significant opportunities in the commercial property sector. Lego has signed a 40,000-square-foot lease at The Beam on Farmer in Tempe, Arizona, where it plans to establish a new consumer services hub by February 2025. This expansion is part of a broader strategy, following their decision to relocate their Americas headquarters to Boston and the development of a $1 billion manufacturing facility in Virginia.

But why does this matter to you?

Lego’s expansion highlights a broader trend: major corporations are increasingly choosing premium, amenity-rich office spaces in well-connected locations. By leasing at The Beam on Farmer, Lego is strategically investing in Tempe—a city rapidly transforming into a tech and finance hub. The Beam on Farmer, with its high asking rents nearing $48 per square foot (well above Tempe’s regional average of $40), demonstrates the sustained demand for quality office spaces, even as hybrid work reshapes the office landscape.

For real estate investors, here are some key lessons to take away:

1. Prioritize Quality and Amenities: Properties like The Beam on Farmer are thriving because they offer more than just office space—they provide a complete experience. Fitness centers, cafes, and outdoor lounges are no longer just perks; they are essential to staying competitive in today's market. Investing in properties with top-tier amenities makes them more attractive to both tenants and employees.
2. Identify Emerging Submarkets: Tempe's growth into a tech and financial hub presents a clear opportunity for savvy investors. As businesses continue to move into these emerging areas, rental premiums follow. Investing early in such submarkets can yield significant returns as demand increases.
3. Resilience of Class A Office Spaces: Despite the ongoing narrative about the decline of office spaces, companies are still willing to pay a premium for the right location. Class A office properties in attractive markets are proving to be resilient, as businesses strive to offer an environment that draws employees back to the office. Investing in modern, amenity-rich spaces remains a sound strategy.

Lego’s move is a testament to the idea that companies will pay for quality—especially when it helps create a flexible, hybrid work environment that employees value. For investors, this is a timely reminder: there’s still significant potential in commercial real estate, particularly in properties that offer a compelling experience and are located in dynamic, well-connected markets.

What’s your perspective? Are you seeing similar trends in your market, or considering adjusting your investment strategy based on moves like Lego’s?