Jennifer Stein, director of the economic development services department for the City of Peoria, shared an interesting experience at Thursday’s 10th Annual AZRE Forum that sums up the state of the Metro Phoenix commercial real estate industry.
“When you trip over Secret Service agents in your office, you know you’ve arrived,” Stein joked about the Biden-Harris Administration’s recent announcement that it would provide up to $400 million under the CHIPS and Science Act to help bring a $2 billion Amkor facility and 2,000 jobs to Peoria.
Stein’s anecdote summarized the sentiment of the AZRE Forum’s panelists: Metro Phoenix has arrived and things are only going to get better.
“We have 32 million square feet of industrial under construction,” said Brian Cousins, senior vice president of commercial real estate for Arizona Bank & Trust, “and rental prices for industrial are up 15%. Things are looking very positive for the industrial sector.”
Things are looking so good, John Orsak, senior vice president at Lincoln, made this bold prediction: “By the end of 2025, we will see a lack of supply for big box industrial.”
Orsak based his prediction on many of the factors that are driving sustained growth in Metro Phoenix.
“The market remains in demand because of all the fundamentals we have going for us,” Orsak said. “We have amazing weather, we are tax friendly, have a pro-business environment and we are blessed geographically.”
But industrial isn’t the only bright spot when it comes to the state of the commercial real estate industry.
“We are seeing less than 5% vacancy in retail,” said Marti Weinstein, partner at Diversified Partners. “We have a very diverse socio-economic population and our retail offerings are finally starting to serve that diverse population. We are seeing more elevated dining and entertaining options for that upper middle class, which is a segment that has been underserved. But we deserve the cool stuff, and we are starting to get it.”
Here are some of the other nuggets of knowledge that came out of the AZRE Forum regarding the state of the commercial real estate industry and what we can expect in the future:
Earl Collins, CEO, Cordia: “The energy problem is not going away. You can expect to see a lot more alternative energy sources, more micro-grids and more projects incorporating self-generating energy sources.”
Jeff Dalton, vice president of pre-construction, FCL Builders: “There is a lot to envy about Metro Phoenix. If you look at Las Vegas, they are running out of land and water. We don’t have those problems. We are in a good position. I don’t see 2008 ever coming back. And I can see at least one more mega-project — $1 billion or more – being announced before the end of the year.”
Ryan Abbott, Southwest region president, Clayco: “We are seeing a complete restructuring of our education system and that has helped tremendously when it comes to skill expansion. This is helping us draw more interest from companies looking to move to Arizona or expand in Arizona and need a skilled workforce to do that.”
Benjamin Gottlieb, founding partner, Gottlieb Law, PLC: “We are going to see an uptrend in conversion of office space to apartments or multifamily properties. It will allow a more productive use of the property.”
Phil Breidenbach, senior executive vice president, Colliers: “As of 2020, Arizona is one of only two states whose population and GDP have both grown for eight consecutive decades.”
Alex Hancock, senior vice president of national sales and leasing, Howard Hughes: “Playing off what Phil said, we are looking forward to to the next eight decades of growth and hope to capture some of the growth when Teravalis delivers its first homes in 2025. Bringing commerce into communities and shortening commutes will help maintain the lifestyle that attracts people to Arizona. Creating those jobs close to homes solves a lot of problems.”
The Beverage Sponsor for the AZRE Forum was Cris’s Cleaning Service. The Lanyard Sponsor was Mayfield Residential.
