Here’s how experts view the outlook for commercial real estate in Arizona
Real estate is booming in Arizona. But how long can it last? AZRE spoke directly to the experts for their opinion on the outlook for commercial real estate in Arizona.
Commercial Real Estate Professionals (CREs) gathered at The Clayton House in Scottsdale on August 5 to hear from industry experts at the 7th Annual AZRE Forum. Panelists provided in-depth analysis of the industrial, office, retail and multi-family housing sectors; discussed the impacts of COVID-19; and predict what might happen in the market in the future.
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âOur panelists are among the most knowledgeable and accomplished people in their field. Bringing them all together to discuss the outlook for commercial real estate gives us insight that is not available anywhere else, âsaid Michael Gossie, editor at AZ Big Media, who presented the event.
The sponsors of the AZRE Forum panel were NAI Horizon, MacQueen & Gottlieb, and Rise48 Equity. The drink sponsor of the AZRE Forum was Corporate banking and trust and the dessert sponsor was the City of TempÃ©. The audio sponsor was Phoenix Audiovisual Technology.
Here is the outlook for commercial real estate and some key takeaways from the three panels.
The opening of the event was the Broker Panel, which provided an up-to-date overview of the current state of CRE in Greater Phoenix. The status quo indicates a positive trend for the state’s industrial products.
Bob Mulhern, Colliers – Moderator
Boston Chauthani, Taylor Street Councilors
Cliff David, Marcus and Millichap / IPA
Laurel Lewis, NAI Horizon
Tony Lydon, JLL
Rob Martensen, Necklaces
âWe are fortunate to live in Arizona where the regulations and taxation are reasonable. For this reason, we are one of the few states to manufacture products, âcomments Tony Lydon, Managing Director of JLL, referring to the influx of manufacturing companies that have established themselves in Arizona.
West of the Colorado River, the Inland Empire region of Southern California is known to be an industrial powerhouse. Products shipped from Asia land at ports in California. The Greater Phoenix’s proximity to Inland Empire, however, makes it an attractive option for distributors.
âInland Empire will always be king because 20 million people live in Southern California,â said Rob Martnesen, executive vice president of Colliers. “But now, instead of just having a giant building in the Inland Empire and distributing it from there, the companies are starting to say, ‘Maybe we’re leaving all we can in the Inland Empire. and let’s put the rest in Phoenix. “
Commenting on the strength of the market, Cliff David, executive general manager of the Real Estate Advice division of Marcus & Millichap, notes: âAt the end of June, there were approximately $ 5.3 billion in sales. It’s reasonable to say we’ll be making $ 11 billion to $ 12 billion by the end of the year.
Even before the effects of the pandemic set in, some predicted the death of retailing due to the convenience and ubiquity of Amazon. But Boston Chauthani, vice president of Taylor Street Advisors, does not hear the death knell for retail. âTo a certain extent, parts of the market are going to die and change. Big box stores are going to downsize, âhe said. âA lot of the headlines focus on deteriorating malls, but small multi-tenant malls perform extremely well. “
COVID-19 IMPACT PANEL
Like any industry, the COVID-19 pandemic has had profound effects on CRE. The hospitality sector has been hit particularly hard due to door-to-door orders and, after businesses reopened, suspicious consumers. Some planned projects were abandoned due to the uncertainty caused by the crisis.
Patrick MacQueen, MacQueen & Gottlieb – Moderator
Ben Darwin, CliftonLarsonAllen
Andrew Geier, Layton Construction
Derek Flottum, Irgens
Kimberly Rollins, Commercial Properties, Inc./CORFAC International
Yet people have found a way to keep doing business. âSmall tenants seemed to stay out of the office for as little time as possible. But our large listed tenants have still not returned â, remarks Derek Flottum, vice-president of development at Irgens.
When it comes to the multi-family sector, Kimberly Rollins, senior vice president of CPI, notes that current conditions are very different from 2008. âWe thought we were heading into another 2008-type recession, but it didn’t happen. is not produced, âshe said. âIn fact, the opposite has happened. A big difference this time is that people have money and they are not over-indebted.
Speaking to the construction industry, Andrew Geier, executive vice president of Layton Construction, said business had exploded during the pandemic. However, the material costs have skyrocketed. âWhen COVID increased, factories slowed down because they thought demand was going to disappear. As a result, the prices of all materials have increased, as well as the waiting times. Before, it took 10 to 12 weeks to get steel beams. Now it takes 10 to 12 months.
COMMERCIAL REAL ESTATE OUTLOOK
Overall, panelists believe the Greater Phoenix has prepared for a bright future thanks to a favorable business environment, well-built infrastructure, and a destination for transplants across the country.
Suzanne Kinney, NAIOP – Moderator
Jamie Godwin, Stevens-Leinweber
Ben Gottlieb, MacQueen & Gottlieb
John Kinser, Corporate Banking
Kristen Stephenson, GPEC
But challenges loom on the horizon, due to an insufficient labor pool under construction. Without enough workers on a job site, lead times start to increase, which increases costs.
Nonetheless, organizations such as the Greater Phoenix Economic Council (GPEC) are working to keep investments in the state. âGPEC has been very successful over the past year, bringing 10,000 jobs to the Valley. There has been a change in what’s to come. In the past, it was half industrial and half office automation, but now it’s closer to two-thirds of manufacturing, ânotes Kristen Stephenson, senior vice president of research and analysis at GPEC.
Looking ahead, Jamie Godwin, owner and president of Stevens-Leinweber Construction, adds: market. I think we will return to the same level of activity as before the pandemic by the end of next year. “
Closing the event, Stephenson predicts, “The Greater Phoenix is ââgoing to become the semiconductor and electronic vehicle hub of the country, if not the world.”