Craig Trbovich Commercial Real Estate – (Also Reported in Phoenix Business Journal)
You may remember the old song with the chorus “Ain’t No Cure for the Summertime Blues.” Well, that is often true for commercial real estate, especially in the Phoenix heat. However, Office activity has turned out to be a partial cure this summer. As I mentioned in the spring, I noticed signs of an improving Office market. And with 848,995 square feet of positive net absorption in the first two months of this quarter and 2.8 million square feet of total absorption, the Phoenix Office market is on a pace that will make Q3 one of the top quarters for Office in the past 5 years!
Those Office results are primarily due to steady job gains in the service sector. (Go to http://t.co/8OYu9ygqPK for a national employment update; http://t.co/I6nNauhpH3 for recent expansion in Phoenix by Vanguard.)
Retail continues to show strength and maybe a little bit of the summertime blues in Q3 to date below, but vacancy continues to decline.
Unfortunately for warehouse space, manufacturing has slowed this year because of declining global demand and tightening government fiscal policies. This is having an effect on the industrial market locally and nationally as activity in that sector will probably remain subdued for the near term. (Go to http://t.co/ctArC0FcwH.)
And we all still wonder what the economy is gonna do, but there ain’t no cure for the summertime blues.
August 31, 2013 Phoenix Lease Statistics
Phoenix Office
|
Q3 to Date |
2013 Q2 |
2012 Yr End |
|
| Lease vacancy rate |
18.8% |
19.2% |
19.4% |
| Lease SF net absorption |
848,995 |
165,061 |
1,610,615 |
| Average lease rate (gross) |
$21.46 |
$20.05 |
$19.95 |
Phoenix Retail
|
Q3 to Date |
2013 Q2 |
2012 Yr End |
|
| Lease vacancy rate |
10.6% |
10.8% |
11.2% |
| Lease SF net absorption |
514,931 |
1,032,306 |
2,767,984 |
| Average lease rate (net) |
$14.61 |
$14.23 |
$14.32 |
Phoenix Warehouse
|
Q3 to Date |
2013 Q2 |
2012 Yr End |
|
| Lease vacancy rate |
11.3% |
11.5% |
11.4% |
| Lease SF net absorption |
156,537 |
512,919 |
2,143,152 |
| Average lease rate (net) |
$5.17 |
$5.52 |
$5.45 |
(Source: CoStar Group, Inc.)