Craig Trbovich Commercial Real Estate –
As I write this, our Federal government has entered shutdown status; however, members of Congress are still getting their paychecks. Let’s hope the current atmosphere in Washington changes soon to be more cooperative and less self-serving. Our leaders could learn a lot from the spirit of cooperation the Commercial Real Estate industry displays every day pulling together to get deals done.
So who has been getting it done in the Phoenix commercial real estate market lately? Well, the Office market took a big step forward in the third quarter with increased activity and several large lease signings, including State Farm with 300,000 square feet at Marina Heights (below) in Tempe and Vanguard Group with 135,000 square feet in North Scottsdale. Even without those two large signings, Q3 was one of the best quarters for the Office market since 2007. And overall there was a significant drop in total vacancy of .7%. Let’s hope this trend can continue because the Office market still has a lot of vacancy out there at 18.7%, almost twice that in the 2006 third quarter.
Retail continues its steady return with another positive quarter continuing a string eight straight quarters of declining vacancy down to a 10.5% and a strong quarter net absorption. Many Retail centers have reinvented their tenant mix and are enjoying the fruits of a steadily improving economy and jobs market.
The Industrial vacancy rate and net absorption have weakened this year, but primarily due to 6 million square feet of new product coming to market, of which a lot is large distribution space in the west valley. When looking at local submarkets like Scottsdale and Deer Valley Airparks for example, they have continued to show declining vacancy and increasing lease rates in their Industrial warehouse sectors.
3rd Quarter Phoenix Lease Statistics
Phoenix Office
|
2013 Q3 |
2013 Q2 |
2013 Q1 |
|
| Lease vacancy rate |
18.7% |
19.4% |
19.2% |
| Lease SF net absorption |
1,229,008 |
165,061 |
329,651 |
| Average lease rate (gross) |
$20.05 |
$19.93 |
$19.36 |
Phoenix Retail
|
2013 Q3 |
2013 Q2 |
2013 Q1 |
|
| Lease vacancy rate |
10.5% |
10.8% |
11.1% |
| Lease SF net absorption |
1,280,544 |
1,032,306 |
471,851 |
| Average lease rate (net) |
$14.02 |
$14.23 |
$14.28 |
Phoenix Warehouse
|
2013 Q3 |
2013 Q2 |
2013 Q1 |
|
| Lease vacancy rate |
11.7% |
11.5% |
11.0% |
| Lease SF net absorption |
(59,299) |
512,919 |
1,250,004 |
| Average lease rate (net) |
$5.21 |
$5.52 |
$5.50 |
(Source: CoStar Group, Inc.)
Later this month, I’ll take a closer look at investment sales for the first half of 2013 and discuss emerging trends. For a no obligation analysis of your property, please call me at (480) 522-2799 to “TrboCharge” your investment real estate today.