August 28, 2020

A Peek Into Our Current State Of Affairs

COVID-19 numbers are going down in AZ and some businesses that have been forced to close are, again, re-opening. This gives us some hope as we work toward putting the economy back to where it was in pre-pandemic times. Amidst the last few months, we do have some positives that have come about, even through the downturn of some companies and real estate sectors. So, where will we go from here? Let’s take a peek.


The increase in demand for industrial property has continued throughout the pandemic as more and more retailers offer online shopping and need distribution space. In quarter 2, industrial rents hit a record high and investors found themselves purchasing industrial assets over other property types. Dollar General, Albertsons and Shoprite have all jumped on-board requesting both cold storage and fulfillment centers to keep up with demand. It is clear that throughout this uncertain time, industrial real estate has remained a constant.


Commercial Metals Company out of Irving, Texas announced it’s plan to build the company’s third “micro-mill” in Mesa. Commercial Metals Co. is a steel and metal product manufacturer and recycler business and say the new facility is expected to employ approximately 185 people. The mill will cost about $300 million to construct and will include solar that will provide power to the facility. The mill is expected to open in early 2023.


As the COVID-19 numbers go down, many businesses are beginning to reopen. A new August survey found that 56% of small businesses have reopened even as some U.S. states and regions maintain restrictions on major events, bars, fitness centers and other businesses. But Alignable’s survey found that 98% of the still closed small businesses plan to reopen. Some owners, however, are still concerned about COVID-related closures as about 14% of small businesses say they are permanently closed in the wake of the pandemic. Overall, it appears that most businesses either will or have begun to put things back together but it’s clear that the Coronavirus has had an impact on our economy.


On a more positive note and according to AZBEX, Arizona has many planned mega projects, each valued at $1B+ total construction cost. Some of the businesses planning to build are Banner, Microsoft, Google, Vantage, Douglas Ranch and many others. This will be a great advantage for our economy as it will certainly bring more jobs along with planned communities to support the growth in population.


Over the last few months, many employees have been working from home. Some may question as to whether productivity remains during this time. Business News Daily found that remote employees work 1.4 more days per month than that of office based employees. As many struggle with balancing their work-life, allowing home based employment has shown to be an effective tool in maintaining this balance while increasing production, in some cases by 47%. In some departments, however, some employees have found it to be difficult working from home. These would be the areas involving more social interaction i.e. customer service and sales as their daily routines have changed significantly. Some are worried that  working so hard in isolation long term could lead to burnout and loneliness. It appears a balancing act may need to be had to ensure the best possible outcome for companies around the country.

In closing, it appears that the industrial market remains strong, even throughout the pandemic. If you’d like more information on industrial properties or any other type of commercial real estate that may suit your needs, please do not hesitate to contact me!

About Craig
Craig Trbovich is a commercial real estate broker with Commercial Properties, Inc. in Scottsdale, Arizona, specializing commercial sales and landlord representation in the Phoenix Metro Area. He applies 35 years of experience as a CPA and an investor to help other owners and investors maximize their returns, bringing a strong financial and tax perspective to all aspects of commercial real estate ownership. His strengths include sales and leasing, as well as an in-depth knowledge of the development community and the local market.