Tag Archives: metro phoenix

Papago Tech Center, Courtesy of CoStar

Auto finance company leases 40KSF in Tempe

CBRE has completed a 40,000-square-foot office lease at Papago Technology Center located at 1700 N. Desert Drive in Tempe, Ariz.

Bryan Taute with CBRE represented the landlord, WDP Partners of Phoenix. The tenant, Greenville, NC-based Regional Acceptance Corp. a division of BB&T Bank, was represented by Jason Moore and Keith Lammersen with JLL.

This lease is another good example of a new office user to the market being drawn to a centrally located building that allows them to easily attract new employees,” said CBRE’s Taute.

Regional Acceptance Corp., a division of BB&T Bank, is a national auto finance company and this lease marks an expansion for the national auto finance company. The 40,000-square-foot space at Papago Technology Center will allow the company to house approximately 300 new employees.

Regional Acceptance Corp. is looking to capitalize on Papago Technology Center’s location in the heart of one of metro Phoenix’s most desired labor pools and plans to hire approximately 300 new employees to staff the center. The company also plans to make significant improvements to the newly-leased space in order to offer future employees a state-of-the-art, modern facility. The company plans to take occupancy of the space in March 2015.

Built in 1993, Papago Technology Center is a 75,000-square-foot flex/office building located in the heart of Tempe and one of metropolitan Phoenix’s largest, most-desired labor pools. The property benefits from direct access to the light rail system via the station at Washington Street and Priest Drive as well as proximity to the Loop-202 via Priest Drive. The property currently has 33,795 square feet of remaining space available for rent.

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Metro Phoenix Ranks No. 3 Nationwide in Adding New Construction Jobs

Metro Phoenix added more new construction jobs during the past year than all but two other metro areas as employment in the local industry hit a 4-year high, according to an analysis released by the Associated General Contractors of America.

Association officials noted, however, that the local construction industry employs less than half the people it did six years ago, and that at current rates of growth, it would take over a decade to return to 2006 levels.

“For an areas that was once the poster child for the construction downturn, Phoenix is finally heading in the right direction,” said Brian Turmail, spokesman for the Associated General Contractors of America. “Make no mistake, though, this area’s construction workforce is still just a fraction of what it was six years ago.”

Turmail said that Metro Phoenix added 6,300 construction jobs between August 2011 and August 2012, a 7% increase. He added that, out of the 337 metro areas the association tracks, only the Los Angeles and Houston areas added more construction jobs during the same time. There are 90,800 people working in construction in Metro Phoenix today, up from 84,500 a year ago.

Even though Metro Phoenix is adding new construction jobs, however, the years-long construction downturn that hit the Valley and the rest of the state has still eliminated more than half the construction jobs that existed in the area in 2006.

Turmail noted that Phoenix has lost 94,000 construction jobs since August 2006, a 51% decline. He added that across Arizona, over half of the 244,300 construction jobs that existed in June 2006 have disappeared.

The spokesman said that Phoenix was not alone in adding construction jobs during the past year. He noted that Tucson added 300 construction jobs during the past year, a 2% increase, while Yuma added 100, a 5% increase.

Nationwide, 130 out of 337 metro areas added new construction jobs between August 2011 and August 2012. But he cautioned that 164 metro areas lost construction jobs during the same time period while employment levels were stagnant in another 43 areas.

Turmail announced the new employment figures during a visit to a local construction career fair, where firms are working to encourage residents to consider construction careers. The industry association spokesman noted that construction work is a skills-based profession that requires training and practice.

He said that was why the association was working with its statewide building chapter, the Arizona Builders’ Alliance, and other groups to push education officials to support skills-based education programs locally and across the country.

“These programs give students another path to success by allowing them to learn essential skills while using their hands,” Turmail noted. “And they prepare them for the high-paying construction jobs that local firms are working to fill.”

 

data centers

Data Centers Flock To Metro Phoenix

More developers of data centers where companies store equipment for online communications are choosing Phoenix for their real-world destination.

The Arizona Republic reports analysts say geographic and economic factors are making metropolitan Phoenix a top-10 market for data centers.

Analysts speaking at a seminar in Chandler on Friday say the area offers low taxes, cheap energy and is close to West Coast markets. They also say Phoenix is considered a city that has low risk of natural disasters.

Cincinnati Bell Inc. began construction in May on what is slated to be the largest data center in metro Phoenix. The 1-million-square-foot facility in Chandler will provide information-technology needs to large companies in the West.

Analysts say there are 32 major data centers in total in Phoenix.

Coldwell Banker

Coldwell Banker Residential Brokerage Expands

Coldwell Banker Residential Brokerage in Arizona announced that it welcomed to its team former members of The JW Realty Group in Gilbert.

Five real estate agents including broker owner Jason Witte have joined Coldwell Banker Residential Brokerage’s various offices throughout metro Phoenix, with Witte assuming a role as an associate broker in the company’s Chandler office.

“This is a strategic opportunity to strengthen our presence throughout the metro Phoenix region,” said Malcolm MacEwen, president and chief operating officer of Coldwell Banker Residential Brokerage in Arizona. “Jason and his team are deeply entrenched in the surrounding real estate market and will be a valuable addition for the Coldwell Banker Residential Brokerage team.”

Witte established The JW Realty Group in 2009 with a particular emphasis on providing clients in the metro Phoenix area with highly specialized information to guide the decision-making process in buying, selling or renting a home.

“With all the technology that Coldwell Banker Residential Brokerage has to offer, I am pleased to become part of this widely respected company,” Witte said. “After weighing everything very carefully, the choice was clear. From the professionalism and quality of the agents to the tools and name recognition, Coldwell Banker Residential Brokerage is a marketplace leader for a reason.”

For more information on Coldwell Banker Residential Brokerage, visit Coldwell Banker’s website at azmoves.com.

Metro Phoenix 1Q Market Analysis

CBRE Releases 1Q 2012 Analysis Of Metro Phoenix Office, Industrial And Retail Markets

CBRE has released its 1Q 2012 market analysis of the metro Phoenix area office, industrial and retail sectors.  Report highlights include:

Office

  • The overall office market vacancy rate increased modestly in the first quarter of the year, rising from 25.5% at year-end 2011 to 26.1%. While vacancy remains high, the Phoenix area ranked fifth among major U.S. metropolitan markets in terms of absorption in 2011.
  • The average asking lease rate for existing office space continued to decline, ending the first quarter at $20.72 per SF. This marks the eighth consecutive quarter in which rates have decreased.
  • Just 959 SF of positive absorption was recorded throughout Metro Phoenix in the first quarter of the year. This was due, in part, to favorable market conditions causing tenants to renew early or trade up in terms of building class. Class A buildings had 266,875 SF of positive absorption, while Class B assets had 320,297 SF of negative absorption. Class C buildings reported positive absorption of 54,381 SF.
  • Speculative construction has returned, with a 92,109 SF office building breaking ground in the Chandler submarket. However, new product is not predicted to significantly impact the Valley’s vacancy rate in the near term.

 

Industrial

  • The industrial market recorded 1.5 MSF of positive net absorption in the first quarter. Leading the way was the Southeast submarket, reporting 795,912 SF of positive absorption. Conversely, the Northeast area reported negative absorption of 42,903 SF.
  • The overall industrial vacancy rate has dropped by slightly more than two full percentage points year-over-year to end the first quarter at 12.1%. Distribution product experienced the greatest improvement, declining from 16% to 11.4% during the same period. However, general industrial space has increased in vacancy, climbing to 17.2% from 15% one year ago.
  • The average asking industrial lease rate for existing product has remained flat since the end of 2009, hovering fairly consistently between $0.55 and $0.54 per SF. The average rate at the end of the first quarter stayed at $0.55 per SF.
  • Build-to-suits continue to dominate the market, representing 97.6% of all current construction activity or 3.25 MSF. Yet, it is expected that speculative construction on the first large-scale distribution building will occur this year, due to continued demand for space and a lack of product greater than 500,000 SF.

 

Retail

  • The Phoenix area retail market recorded 663,337 SF of positive absorption in the first quarter, which is the largest quarterly gain of occupied space in the past three years. Of its 12 submarkets, only Scottsdale recorded negative absorption in the first quarter, with a loss of 23,319 SF.
  • The overall retail vacancy rate in Metro Phoenix declined half a percentage point in the first quarter to 11.7%. The Mesa/Chandler/Gilbert submarket, which has the largest rentable area, reported the highest vacancy, 14.7%, while Apache Junction had the lowest vacancy rate, 6.4%.
  • The average net asking lease rate for existing retail space throughout the Phoenix area continued to decline in the first quarter of the year, dropping from $15.90 per SF at year-end 2011 to $15.71 per SF. By comparison, the current rate is identical to the average net asking lease rate one year ago.
  • While the total amount of available big box space decreased in the first quarter, leaving the market with 295 spaces and 8.1 MSF, it remains a concern for property owners. Much of this space, 71.5%, is classified as class C or D, which remains the most challenging product to backfill.

 

SRP Study Reveals How Businesses Reacted, Adapted To Economy

SRP Study Reveals How Businesses Reacted, Adapted To Economy

The “2011 SRP Metro-Phoenix Business Study: New Strategies for Success” reveals how businesses have survived and adapted operations during the economic slowdown.

“The past several years have been economically challenging for families, businesses and every level of government. Everyone felt the pinch of our recent economic downturn,” said Mark Bonsall, Salt River Project (SRP) general manager and chief executive officer. “As a company doing business in Arizona for more than 100 years, SRP knows the vitality of our community is directly related to the success of our local businesses.”

SRP, Arizona State University and WestGroup Research conducted the study to determine how businesses have adapted during the economic slowdown.

Phoenix-area businesses were asked to name the top challenges faced in the past two or three years. Fifty-six percent cited the economy as their biggest challenge, followed by cash flow (14 percent) and finding/retaining customers (11 percent).

A similar study was done in spring 2007. The top challenges cited before the economic slowdown were cash flow (21 percent), finding/retaining employees (18 percent), finding/retaining customers (14 percent) and marketing (7 percent). Only 1 percent mentioned the economy.

Despite enduring a tumultuous four years, 50 percent of businesses anticipate their financial position will improve in the next 12 months; 12 percent expect their situation to become worse. In addition, 46 percent expect to expand within their next planning cycle, and another 46 percent plan to remain the same size.

In addition to partnering on this report, SRP also created the Business Resource Center (BRC) at srpbizresource.com. The BRC is a free, online, one-stop information center that offers important business information, resources and advice to help take businesses to the next level.

“SRP wants to be part of the solution that keeps the Valley moving forward,” Bonsall said. “We believe this study and our Business Resource Center are steps in the right direction. We view both as tools to move us closer to a stronger and more prosperous Phoenix economy.”

Sluggish Demand for Office Space in Phoenix

Sluggish Demand for Office Space in Metro Phoenix Continues

The Phoenix office market continued to feel the effects of a sluggish and wavering economy, according to Cassidy Turley BRE Commercial’s 3Q 2010 office market trends report released today.

Economic indicators remain mixed causing uncertainty as to whether our economy is headed into a “double dip” recession or a period of slow growth. The best word to describe market conditions during the third quarter is flat. Net absorption was negative for the second time this year and the overall vacancy rate increased 30 basis points to finish at an all-time high of 27.9%.

Tempe/South Chandler and 44th Street Corridor posted the largest gains in net absorption; collectively they gained more than 257,590 SF in the third quarter. Downtown North and Airport Area were the two submarkets with the largest declines in occupancy; they collectively lost 221,927 SF during the third quarter. The majority of leasing activity has been in space that is an upgrade to the tenant’s prior location, otherwise known as “flight to quality.”

This has been a trend for several quarters, as nearly all positive absorption, both the quarter and year-to-date, have come from either Class A buildings or new construction. Class A average asking rates continue
to decline as landlords compete for tenants by offering heavy concessions and discounted rates. Class A rental rates dropped nearly 2 percent in the third quarter to finish at $25.07.

With the extreme over-supply of space, overall asking rental rates will continue to soften but at a slower pace and should reach bottom within the next 12 months. Office market leasing is likely to remain flat through 2010 and improve gradually into 2011 as businesses start to add jobs and tenants take advantage of reduced rates. Landlords that have weathered the recession, remained financially strong and adjusted to current market conditions should start to see some relief as tenant demand gradually improves.

With large blocks of premium office space available, lower rental rates, a high quality of life, affordable housing and great weather, Metro Phoenix is positioned to attract companies looking to relocate or add to their current operations. These factors should improve leasing and owner occupant demand bringing some relief to the office sector.

3rd Quarter Figures Upbeat for Retail and Market Sector

3Q Figures Upbeat For Office, Industrial & Retail Market Sectors

The Arizona economy has marked some improvement and is much better than the public perceives, according to the Third Quarter 2010 Economic Outlook released by the Forecasting Project at the University of Arizona.

However, the report also states that will it will take some time for many Arizonans to recognize the improvement in the state’s economy and to repair the damage done by the recession. Estimates are that it will be 2013 or early 2014 before all the damage that occurred during the recession is repaired. The long-term forecast is for nation-leading growth to return to Arizona.

There was also some positive news in the CB Richard Ellis Third Quarter 2010 Analysis of Metro Phoenix Office, Industrial and Retail Markets. Highlights included:

Office: After 12 consecutive quarterly increases, the office market vacancy rate remained unchanged from the second quarter, at 25.9 percent. While the full service average asking lease rate for office space has leveled off in 2010, it has fallen 12.5 percent in the past two years, from $25.44 per square foot in third quarter 2008 to $22.25 per square foot today.

Absorption for the year is 147,610 square feet, with gross activity of 4.3 million square feet. This compares with negative absorption of 897,916 square feet and gross activity of 2.9 million square feet at the same time last year. An increasing supply of office sublease space continues to impact the absorption of direct space. There was 2.2 million square feet of available sublease space at the end of the third quarter compared to 2 million square feet one year ago.

Industrial: Through the first three quarters of 2010, the Metro Phoenix industrial market had positive absorption of 2.6 million square feet. Leading the way was the Southwest submarket, with more than 3.4 million square feet of positive absorption year-to-date. The industrial market vacancy rate decreased for the second consecutive quarter, dropping from 16.4 percent at the end of the first quarter to 15.3 percent today. One year ago the vacancy rate was 15.8 percent.

The net direct average asking lease rate for existing industrial product remained relatively unchanged during the past three months, ending the third quarter at $0.54 per square foot. However, in the last year the rate has dropped 5.3 percent. While there is 619,800 square feet of industrial product under construction, it consists entirely of build-to-suit projects. No speculative developments broke ground in the third quarter. This trend is expected to continue due to the challenging financial market and the glut of space.

Retail: The retail market experienced positive absorption in the third quarter, posting 83,491 square feet. This was the first time in seven consecutive quarters that the metro area reported more retail space was gained than lost. Vacancy increased slightly in the third quarter, from 12.2 percent to 12.3 percent. In comparison, the retail vacancy rate one year ago was 10.9 percent.

The average net asking lease rate for existing retail centers has declined 9.4 percent since the end of 2009, dropping from $17.33 per square foot to $15.71 per square foot at the end of the third quarter. The large supply of available big box space continues to weigh heavily on the Phoenix area retail market. Currently there are 303 spaces greater than 10,000 square feet, totaling 8.2 million square feet. The majority, 34 percent, can be found in the Mesa/Chandler/Gilbert submarket, with 2.8 million square feet of space.

Valley Commercial, Real Estate Sales Dip

Valley Residential, Commercial Real Estate Markets Still Struggling, ASU Report Shows

Residential and commercial real estate prices in Metro Phoenix  are still suffering in the rough economy, a report from the W. P. Carey School of Business at Arizona State University show.

Valley home prices are going negative for the first time in months, and commercial real estate prices are about 30-percent lower than at the same time last year, according to the report.

On the residential side, the ASU-Repeat Sales Index (ASU-RSI) measures annual changes in average Phoenix-area home prices. The latest index shows a 0.2 percent drop from August 2009 to August 2010. Previous reports revealed no change from July 2009 to July 2010 and small annual increases in June, May and April. The index hasn’t been in negative territory since March.

“This is the first overall decline since March, but it is consistent with the small ups and downs associated with relatively stable housing prices,” assures the report’s author, Professor Karl Guntermann, the Fred E. Taylor Professor of Real Estate, who is assisted by Research Associate Adam Nowak. “The ASU-RSI has been relatively stable for more than a year, which suggests that changes in house prices will be moderate going forward unless there are dramatic changes in the Phoenix economy or housing market.”

Foreclosed homes have been one of the stronger segments of the market in recent months, according to Guntermann. However, the price index in that segment declined 4 percent in August after five straight months of increases.

“The weakness in prices may mean there finally is insufficient demand to absorb the steady stream of foreclosures that enter the market each month. However, it is too early to tell if the decline is the start of a new trend or reflects just a temporary slowdown,”  Guntermann says. “The data also doesn’t provide a basis for optimism when it comes to non-foreclosure homes, which showed a 9 percent annual drop in August. That’s the segment of the market of interest to most homeowners either waiting to sell or just wanting to know when their equity will stop shrinking.”

Median home prices in the Valley have also fallen out of the $125,000-$135,000 range where they had been for almost a year. The preliminary median figure for August is just $122,000.

The preliminary median price of a townhouse/condominium in the Phoenix area for August was just $65,000, down from $77,100 in July.

“This is a continuation of a downward trend that began in June,”  Guntermann explains. “Townhouse/condo prices seem to periodically take a step down in price and then stabilize for several months before starting the next decline.”

On the commercial side of Phoenix-area real estate, the first two quarters of 2010 show somewhat of a leveling off. Guntermann says commercial prices peaked at an annual rate of 28 percent in the third quarter of 2006. The commercial index began to decline dramatically by the end of 2008, and the decline sped up throughout 2009.

“By the end of 2009, the annual decline reached 40 percent,”  Guntermann says. “Commercial prices in 2010 remain about 30 percent lower than the corresponding quarters in 2009, reflecting a market with significant problems. The good news is that the commercial market appears to be showing signs of stability rather than worsening declines.”

Both the commercial and residential indices are based on repeat sales, the most reliable way to estimate price changes in the real estate market. Repeat sales compare the prices of a single property against itself at different points in time, instead of comparing different homes and commercial properties with different quality factors.

The new ASU-RSI reports can be found at http://wpcarey.asu.edu/realestate/housing-market-reports.cfm and http://wpcarey.asu.edu/realestate/commercial-market-reports.cfm.