With the Valley’s housing market holding up to 50,000 to 75,000 excess housing units, Pollack said supply and demand might not get back to normal until 2014.
Meanwhile, the commercial real estate market in the office, industrial and retail sectors remains bleak.
“Those markets are slow because the economic recovery is slow, and because it will be a while before we create a sufficient amount of jobs to where there will be much demand for those product types,” Pollack said.
Pollack foresees the office absorption rate to be higher in 2011 and 2012, while inventory declines. The reason? Currently, there are no multitenant office buildings under construction, and no significant spec-multitenant building is expected for the next three to five years.
“The good news is there is a boom out there,” Pollack said. “But that boom is out there in 2014 or 2015.”
Arizona has long relied on population growth to spur an economic recovery. But, McPheters said, with the housing market crippled across the country, people in other states can’t sell their homes and move to Arizona. As a result, he expects the state’s population will increase by less than 2 percent in 2011. Five or six year ago, that increase was at about 4 percent.
Personal Income and Retail Sales
In 2009, Arizonans saw a 2.3 percent drop in their personal incomes, the first decrease since records started being kept. In 2011, McPheters said personal income is projected to grow by 3.5 percent. That’s a far cry from the 13.4 percent increase seen in 2006.
Retail sales remain anemic for the fourth consecutive year and are expected to grow by a mere 1 percent in 2010. However, with Arizona’s economy starting to generate jobs and personal income showing signs of life, McPheters said, retail sales are forecasted to rise by 6 percent in 2011. But, as a reminder of just how far the Arizona economy has fallen, total retail sales in 2011 will be $56 billion, more than $7 billion below 2007.
To read more about the 2011 Economic Forecast, visit knowledge.wpcarey.asu.edu.