“Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.”
- Rents Bottom Out
- Investment Sales Volume Up
- New Construction is Minimal
- Vacancy Expected to be 10% or less by end of the year
The Metro Phoenix retail market is continuing to improve with strong momentum continuing to build in leasing activity as well as investment sale transactions. Additionally, the trend in rental rates, which lag behind leasing and absorption activity, has also bottomed out and has turned positive. With minimal new construction in the pipeline, market fundamentals are favorable for strong continued momentum growth in leasing, absorption and rent growth.
In the second quarter of the year strong tenant leasing activity resulted in over 1,000,000 square feet of retail space being absorbed. This marks the ninth quarter in a row of positive leasing activity and further shows that the worst is well behind us. New leases with tenants such as RoomStore Furniture (120,000 SF), Blast Fitness (61,500 SF), Hobby Lobby (50,000 SF), AMC Theaters (37,600 SF), Michaels (30,000 SF), Golds Gym (30,000 SF), Big Lots (28,400 SF), multiple deals with Goodwill (12,000 – 25,000 SF), multiple new Fitness Center leases and Furniture Stores have all contributed to robust leasing activity in the marketplace.
Investment sale activity in the second quarter of 2013 increased with 40 transactions taking place for a total transaction volume of $339M at an average sales price of $121/Square Foot. This is up from the first quarter of the year when 36 transactions took place for a total transaction volume of $218M at an average price of $218/Square Foot. Sales activity, thus far in the year, reflect an increase in the number of sales taking place although the average price per square foot is lower reflecting an increase in the volume of “B” and “C” properties trading.
Lease rates have finally bottomed out and are expected to rise this year for the first time since the beginning of the recession in 2007. Average asking rates in the Phoenix Metro retail market are $14.25 per SF up $.05 from the first quarter. With continued increasing tenant demand and virtually no new supply, rates are expected to begin to rise which is a very welcomed occurrence for patient landlords.
Vacancy & Availability
Vacancy in the Metro Phoenix retail market dropped to 11.1% during the second quarter, down from 11.4% in the first quarter of the year. Although not yet back to pre-recession occupancy rates, the Phoenix retail market has improved substantially from its high water mark of 12.9% in 2011. Further, with very little new construction in the pipeline and with an increasing demand from tenants Metro Phoenix’s vacancy rate will continue to improve thought he balance of the year and beyond.
Summary and Forecast
As evidenced by the continued leasing activity, absorption and investor demand, the worst is well behind us in the Metro Phoenix Retail marketplace. Continued tenant demand coupled by limited new supply will drive the vacancy rate to 10% or below by the end of the year and rental rates will start their climb upwards, all of which is welcomed news to retail property owners.
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Walter Unger CCIM, CCSS, CCLS
I am a successful Commercial Investment Real Estate Broker in Arizona now for 15 years and I worked with banks and their commercial REO properties for 3 years. I am also a commercial landspecialist in Phoenix and a Landspecialist in Arizona.
WHETHER YOU LEASE OR OWN
NOW IS THE TIME FOR YOU TO EXPAND, UPGRADE OR INVEST.
we are at on the a rise of the cycle in Commercial Real Estate. so there is only one way and it’s called we are going up and now is the time for you to expand, upgrade or invest in Commercial Properties in Phoenix. The prices on deals I may get you will not be around forever.
WAITING TO SELL YOUR LAND ? TIMES CHANGE / IT’S TIME
We barely could give land away the last few years, but times are changing. Even in those meager years, I sold more land across the state than most other brokers. Before the real estate crash I was a land specialist in Arizona with millions of dollars of transactions, but then I had to change and also sell other commercial investment properties, which was fun, but I am a Commercial Landspecialist in Arizonal, a Commercial Land Specialist in Phoenix and love to sell land, one acre to thousands of acres.
If you have any questions about Commercial Investment Properties in Phoenix or Commercial Investment Properties in Arizona, I will gladly sit down with you and share my expertise and my professional opinion in Commercial Properties in Phoenix or Commercial Properties in Arizona with you.Obviously I am also in this to make money, but it could be a win-win situation for all of us.
Please reply by e-mail firstname.lastname@example.org or call me 520-975-5207 (cell) 602-778-5110 (office direct).
Walter Unger CCIM
Kasten Long Commercial
2821 E. Camelback Road, Suite 600
Phoenix, AZ 85016
Office : 602-445-4141
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