The commercial real estate in the Phoenix-Scottsdale area has been trending slowly returning to pre-recession rates. Phoenix’s population is estimated to grow about 2.6% over the coming years, with the population between ages 20-34 estimated to be about 11% of that growth. PwC and the Urban Land Institute, publishers of the highly regarded ““Emerging Trends in Real Estate” report has moved the Phoenix area to 25th from last year’s 33rd place among the best places for investors to put their money.
Office Buildings
Office buildings in the Phoenix area are becoming less available with the advantage that rents have been rising 2% to 4% in the last year. Two companies have invested large amounts in the Phoenix area in the last year. Lowe Enterprises just purchased two office buildings in the area for a total of $51 million dollars. In the Tempe area, the Marina Heights development is a $600 million office/retail development expected to be anchored by a large State Farm Insurance work force.
Price per Square Feet of Office Buildings in Phoenix: January 2013 -$103; January 2014-$110; August 2014-$116.
Industrial Properties
The demand for industrial real estate in the Phoenix area has pushed the vacancy rated down to 12.9%. It is stated that investors are looking at the area and these investors expect to buy a total of 7 million square feet of space at the end. Sears, Hensley and Marathon Equipment have signed recent deals for large amounts of industrial space in the Phoenix area. In addition, 5 million square feet of new facilities are under construction in the valley. Industrial real estate in the Phoenix area should continue to rise since it is lower than the county-wide average by 1.7%.
Dollars per Square Feet in the Phoenix Industrial Area: January 2013-$76; January 2014-$81; August 2014-$83.
Retail Real Estate
Retail real estate in the Phoenix area has risen about 2% in the last year. Vacancy rates are also down to 10%, which is up from 15% last year. Some shopping centers have been sold for improving amounts, including the recent sale of Vestar’s Canyon Trails Towne Center in Goodyear which sold for 24.5 million dollars last year. Larger stores are entering the area, including Ross and Burlington Coat Factory.
Dollars per Square Feet in the Phoenix Retail Area: January 2013-$113; January 2014-$115; August 2014-$117.
Multifamily Properties
Residential buildings with militants have done well in the Phoenix area. Prices have increased about 10.7% over last year. Current rates are $52,318, one of the highest rates in the county. This trend is expected to increase in the next several years as younger workers move into the valley.
Cost of Multifamily Properties in the Phoenix Area per Unit: January 2013-$40,000; January 2014- $45,000; August 2014-$52,318.
So, Phoenix is experiencing the best of both worlds. It seems to be a good time invest in the area, but also a good time to hold on to your properties if seeking higher property values.
Title Talk by FNTA Phoenix 