Craig Trbovich Commercial Real Estate –
Anticipation – Is Keeping Us Waiting… Carly Simon wasn’t singing about the economy back in the 70’s, but she could today. As we move into the second quarter with the Phoenix Commercial Real Estate leasing market continuing its gradual ascent from the Great Recession, the big question from most people is when will a thriving economy finally arrive?
Fortunately, 2014 is expected to be an improvement over 2013, which was dogged by sequestration and government shutdown. Most economic forecasts believe the Federal government’s drag on the economy in 2013 will have much less effect in 2014, especially with budget agreement completed. Household financial obligations as a percent of personal income has declined dramatically from a peak in 2007 to one of its lowest levels since 1980. Job growth and unemployment continue to improve. Good news for the economy since consumer spending accounts for about two-thirds of our GDP. While risks of uncertainty are always with us, US GDP is expected to improve from a lackluster 1.9% in 2013 to a healthier 2.5-2.7% in 2014 and by another half-point for 2015.
And while the overall Phoenix market has plenty of room for improvement, there are peak market levels and activity being reached in pockets around the Valley of the Sun. For example, the Industrial vacancy rate in the Deer Valley submarket is only 5.2%, lower than its lowest rates in the 2006-07 era. Office vacancy in the Tempe submarket is down to 10.3% and rapidly trending lower. The Central Scottsdale retail market is thriving with a vacancy rate of 8.1% and an average asking rate of $24 per square foot. And lender-owned properties are few and far apart again.
Waiting can be the most difficult part, but as we keep improving, we are seeing a stronger economy and a more balanced real estate market. The Anticipation may soon be over.
2014 First Quarter Phoenix Lease Statistics
Phoenix Office
Phoenix Retail
Phoenix Industrial Warehouse
(Source: CoStar Group, Inc.)
Please share this post below and check back soon for a look at Phoenix commercial sales for the first quarter in my next blog.
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In the past four years, we have completed over 5,000 transactions at CPI. That is an average of over 100 transactions per month! Valley-wide, no other commercial real estate firm negotiates, prepares, and completes more transactions than CPI. For a no obligation analysis of your property, please call me at (480) 522-2799 to “TrboCharge” your investment real estate today.