Craig Trbovich Commercial Real Estate –
Sales results are in for the first quarter of 2013 and a summary of the 12 month moving comparison based on results from CoStar is presented below. Although activity is far from 2007 levels when office sales totaled $2.9 billion, the most recent 12 month period total of $686 million is more than double the $308 million of 2009.
Average prices per square foot are still below replacement costs in most cases, but it is encouraging to see those numbers improving in all three sectors. That trend will continue as fewer REO properties enter the market and vacancies continue to decline while little new product is coming to market.
In the office market, financial companies such as banks, investment firms, insurance, and mortgage companies are experiencing solid profits and are expanding. However, it may not be until next year before we see a broader improvement for office users and more significant gains in the overall office market.
The warehouse market continues to have strong demand and improving sales data. Vacancies are down to a point where there is new construction starting in certain submarkets and product types, like distribution. Expect that trend to continue and expand, and look for more new product to come out of the ground in the coming quarters.
The retail market is showing signs of momentum as housing and net migration to Phoenix experience significant improvements. That market should continue to strengthen at a faster pace in the coming quarters if these trends continue.
Overall, the Phoenix market and economy are gaining momentum. Housing and population gains are among the best in the nation. The State of Arizona has enacted legislation in recent years to improve its ability to attract business, and has worked to repair damage done to the state’s reputation regarding immigration. The results are showing up in recent announcements by companies that are moving to and expanding in Arizona. Biosciences also have a great future in Arizona and offer an opportunity for a more educated, higher earning employment base. So while there are still national economic concerns, Arizona is well positioned to create jobs, bring new residents and improve the demand for commercial properties.
Office
|
12 Months Ended March 31, 2013 |
12 Months Ended March 31, 2012 |
Change |
|
| Cap Rate |
7.06% |
7.86% |
(0.80) |
| Price per SF |
$135.87 |
$129.72 |
$6.15 |
| Total Sales (number) |
84 |
57 |
27 |
| Total Sales (dollars) |
$686,491,659 |
$590,004,660 |
$96,486,999 |
Warehouse
|
12 Months Ended March 31, 2013 |
12 Months Ended March 31, 2012 |
Change |
|
| Cap Rate |
6.40% |
6.51% |
(0.11) |
| Price per SF |
$53.07 |
$45.62 |
$7.45 |
| Total Sales (number) |
143 |
117 |
26 |
| Total Sales (dollars) |
$411,479,905 |
$281,998,499 |
$129,481,406 |
Retail
|
12 Months Ended March 31, 2013 |
12 Months Ended March 31, 2012 |
Change |
|
| Cap Rate |
8.39% |
7.79% |
0.60 |
| Price per SF |
$84.81 |
$74.56 |
$10.25 |
| Total Sales (number) |
87 |
85 |
2 |
| Total Sales (dollars) |
$325,154,193 |
$296,212,741 |
$28,941,452 |
If you have an interest in a copy of the CoStar Quarterly Reports for Phoenix, click on each link accordingly: 2013 Q1 Phoenix Office, 2013 Q1 Phoenix Industrial, 2013 Q1 Phoenix Retail