The Arizona Commercial Brokers Association (ACBA) has released its 2014 transaction recap, reporting more than 380 completed industrial sale/lease transactions totaling over 3 million square feet in Phoenix in the past 12 months. Made up of veteran brokers from independent to regional firms, ACBA provides on-the-ground insight about the group’s major client demographic: the mid-market industrial user.
“ACBA members represent the biggest driver of Phoenix’s industrial 2014 real estate year – the mid-market buyer and tenant,” said ACBA President and Voit Real Estate Services Vice President Mike Kasulaitis. “This year we observed an uptick in activity across the board. Taking into account that single-family home sales were negative and foreclosures still loom, we find this encouraging.”
“Among our most active clients, 2014 sales were dominated by end users and institutional money. On the leasing side, the smaller, incubator warehouse tenants occupying 20,000 square feet or less were on a roll,” added ACBA board member and Cutler Commercial broker Todd Hamilton. “Low interest rates, below-replacement pricing and strong local growth will make 2015 an exciting time to be an owner and seller, but it might ring in a ‘sticker-shock’ year for the tenant and buyer.”
Based on market data and trends among his clients, Hamilton expects metro Phoenix’s average 11 percent industrial vacancy rate to fall by 50 or more basis points, to the 10.5 percent range by mid-year 2015. He also anticipates 2015 to set the stage for rent growth, which has remained stagnant for the past five years but that Hamilton believes will increase by 3 to 5 percent in 2015.
For 2014, ACBA members experienced the strongest activity among small and mid-size users. The most active submarkets included Deer Valley, Southwest Phoenix and Central Phoenix.
“Although Arizona has continued to lag most other parts of the country, I do believe we are on the road to recovery, and that 2015 will be more active in all aspects of our economy,” said Carl Johnson, ACBA charter member and Vice President at DAUM Commercial Real Estate. “It’s a funny market now. Inventory is tight but demand is lukewarm. However, as populations grow, housing demand returns and 30 to 40-year-olds recover from recessionary setbacks, Maricopa, Pima and Pinal counties will most certainly pull out of that stagnant holding pattern.”