1. Different geographical areas bring very different results
When you are looking to invest in Arizona commercial real estate, different geographical areas of the market can have dramatically different results in terms of investment return, including things such as occupancy rate and tenancy terms. As an example, north Scottsdale and Tempe have completely different demographics but may attract similar tenant types due to similar industries, medical parks and office facilities.
Make sure your commercial broker provides demographic information and property comparables in the areas you are looking. It’s very important to have your expectations in the right place when you are looking to buy commercial investment properties.
2. Don’t always believe what you hear
You may be surprised to find that your local market is doing much better than you think it is. With bad news being the seemingly hot news trend, I can tell you as a commercial real estate expert that most of what you hear isn’t true.
North Scottsdale’s commercial real estate market hit bottom months ago and has been on the steady rise ever since. Most offers I make for my clients are greeted with a multiple-offer counteroffer requesting highest and best in return. It’s crazy out there right now with multiple offers, multiple buyers and a lot of investors; in fact, the market here in Arizona is the most competitive I’ve seen — and that’s a good thing.
3. Is there still prime investment opportunities in Arizona?
You bet there is, but your commercial broker will have to work hard to find those bank-owned and “bottom dollar” deals.
Investors love Arizona for many reasons — great weather, beautiful scenery and there are really no natural disasters to speak of. In fact, big companies such as Wells Fargo, American Express and Chase have chosen Arizona as the place to house their large data warehouses because there are no natural disasters like earthquakes and tornadoes.
Why do I go on about all of this? Because investors from all over the world have come to the Phoenix area to buy up all of the surplus and bank-owned real estate. If you’re waiting for the market to hit bottom, it already has; get out there and start your research as soon as possible. You don’t want to look back a year from now and say, “I wish I would have taken advantage of low prices when I had the chance.”
4. Rents are up!
Tenants are paying more per month now than they have in years. Because local spending is up in metropolitan Phoenix and its surrounding suburbs, small- and medium-sized businesses are finding the need to expand and grow into commercial space. The demand for standard office space and industrial office space is at an all-time high right now and is demanding premium pricing from an investor’s standpoint.
Have your broker look for buildings in areas near successful residential subdivisions and big box retailers. With gas prices high and the preference to live “greener,” prospective tenants don’t like to commute and prefer to work closer to home.
In summary, Arizona has taken a beating in the past with respect to residential and commercial real estate, but Arizona has always proven its resiliency by bouncing back stronger than ever. Residential sales are breaking records, certain sectors of commercial real estate are red hot, and there is no better time than now to get out and buy real estate. Find a commercial broker that will work hard for you and provide information in a timely fashion so that you will have the opportunity to succeed in making your first or your next real estate purchase.
Happy Investing!
[stextbox id=”grey”]These tips are provided by Pete Baldwin, designated broker and owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full- custom, handcrafted log homes in Northern Arizona. For more information, please visit www.PeteBaldwin.com.[/stextbox]
