Consistency. That’s the most frequently used word when the commercial real estate landscape in Phoenix is discussed. And that’s not a bad thing. Phoenix-Metro is still affordable, is steadily modernizing and the with success in the area of economic development, the cities that make up the metro area are adapting to create a better quality of life for its residents.
To be able to forecast and figure out where Phoenix fits in, it’s essential to understand the trends and economic, geopolitical and business drivers.
Top Trends Making an Impact
Low inflation, low interest rates
“Lower for (even) longer” remains the mantra for investors according to a 2020 forecast from Avision Young. Capital continues to flow into the commercial real estate industry. On a positive note, real estate investors in Phoenix appear to have learned their lesson from past experience. So, if another recession is going to hit, growth has been controlled and leadership in the industry has proven to be innovative.
Awareness of climate change and environmental sustainability
Arizona has responded to the climate crisis issue with the closure of a major coal plant and the construction of two solar storage battery projects. This trend is happening globally, so it makes sense that Arizona is following suit.
Strong labor market
Metro Phoenix is going through a major growth spurt; adding new residents with sophisticated skill sets. The labor market is strong and competitive, and the unemployment rate stands at a low 3.8 percent with the quality of jobs increasing.
Forecast: Positive with a chance of retail sector slowdown
AZBigMedia.com recently summed up their outlook for Greater Phoenix and examined the industrial market, multifamily, the office market in greater Phoenix, retail and finally, land values.
The industrial outlook is strong with healthy activity across the Valley. Cities in the Southeast Valley, including Chandler and Mesa have a lot to offer in terms of tech-related manufacturing space. JLL reports that it’s seeing solid pre-leasing activity.
The multifamily market is short on supply, making Phoenix one of the top cities for investors and developers in the next few years. According to CBRE Phoenix is among the top rent growth markets nationally in 2020. Right now, all signs indicate that we have a more renter centric population but that doesn’t mean there’s not opportunity, with low interest rates and a strong labor market the city is continuing to expand.
Not by coincidence, the office market is on a similar path. The demand for office space is high with unprecedented numbers reported in Q4, 2019.
Consumer behavior is changing, so one sector that might see a dip is retail, however current vacancies are at pre-recession levels. It’s forecast that most of the retail developments will happen in the suburbs, rather than less established parts of greater Phoenix.
With all these predictions and viewpoints, it should not come as a surprise that land values are rising as the Valley sprawls even further. It looks like the West Valley will get an opportunity to shine in 2020, with Fortune 500 players such as Amazon buying up even more land.
Going into the next decade the commercial real estate forecast is looking extremely healthy for Phoenix and its metro areas. With more than four decades of experience at Landmark Title, we have seen it all. We’re positive that Phoenix is on the right track and investors would be wise not to overlook that.
Choosing a detail-orientated title and escrow agency is paramount when handling complex commercial real estate transactions. Landmark Title’s team is highly knowledgeable and experienced. Contact our us today to learn more about our services.