During a meeting last week, one of our team members brought out a copy of The Real State newsletter from June 2014. It was like pulling the lever on a time machine to a decade ago—and an excellent reminder that, in every market, there will be challenges working through the system. In the current environment, inflation, interest rates, and low supply are the dominant themes in Phoenix housing. Looking back to 2014, the pain from the Great Recession a few years earlier had started to fade, but housing demand was still weak and buyers had a slight negotiation edge after a balanced market earlier ..read more

During a recent meeting, one of our team members brought along the June 2014 issue of The Real State—and it served as a reminder as to how much change can occur in commercial real estate in the span of a decade. Today’s biggest concerns in CRE revolve around inflation, interest rates, and pressures on the office and multifamily markets. Back in 2014, however, memories were still fresh about the financial devastation of the Great Recession. The acute pains had mostly faded. Nationally, job numbers had rebounded, although Phoenix lagged the pack, recovering just over 60% of its lost jobs by then ..read more

Much like the rest of the country, the residential housing market in Greater Phoenix is focused on where interest rates are headed. For the foreseeable future, it appears that inflation will be the tail wagging the Phoenix housing dog.  In their May meeting, Federal Reserve officials remained concerned about persistently high levels of inflation in an economy that’s chugging along—with monthly data indicating goods and services prices are increasing at a pace well above the Fed’s 2% target. The result? The benchmark rate remains at a 23-year high—and the expectations from last year of mul ..read more

In March, we observed as one of our three CRE trends in Greater Phoenix that notices of trustees sales were starting to hit the market, after many months of speculation about inevitable distress. The newest data points from Real Capital Analytics confirm the reasons for concern. US apartment transactions have hit their lowest level since the pandemic: “Nearly 1,040 apartment properties changed hands at a value of $20.6 billion during 1st quarter 2024. The overall sales volume during the quarter was down 25% from 1st quarter 2023, while the number of properties trading hands was down 26% during ..read more

About $820 billion in CRE loans are coming due in 2024 according to MSCI—about 20% of that linked to office properties. As noted in last month’s coverage of commercial real estate trends in Greater Phoenix, concerns about defaults are rising, but we are not yet seeing them in any significant number. (Indeed, in highly amenitized properties in the Camelback Corridor, we are seeing price improvement—a stark contrast, for example, to the weakness in the Central Avenue corridor.) While loans are coming due, lenders seem to be frozen, reminiscent of the “extend and pretend” days of the Great Recess ..read more

The Greater Phoenix residential market continues its snail’s pace. We remain short on supply, and occasional downward blips in interest rates have not moved demand—as noted last month, the Phoenix housing market is stuck in a loop. The anticipated interest rate reductions projected by the Federal Reserve may help, although mortgage companies have already built some of that expectation into their current interest rates. In addition, there is some speculation that we will be see only two rate cuts rather than three during the remainder of 2024. With additional rate decreases, it should become ea ..read more

  As we head into the end of the first quarter, three CRE trends bear watching in the Phoenix market—offering examples of the ever-changing landscape to which landlords and investors need to adapt. CRE Trend #1: Default Concerns Rising Concerns about potential defaults on the multifamily side have been lingering for months, and we are finally seeing notices of trustee sales. While the One Camelback development in the fall was the highest-profile situation so far, we are closer to the beginning of this CRE trend than the end. Vacancies are up and average asking rents contracted 3.7% YOY th ..read more

Our country’s current economic situation features uncertainty in a variety of flavors, shapes and sizes, and the commercial real estate market feels the influence of all of them. Phoenix Business Journal asked the leaders of some of the Valley’s largest brokerages their thoughts inflation, remote work and subleasing in the market. Beth Jo Zeitzer, CEO and Designated Broker at R.O.I. Properties, shared her insight on the Phoenix-area subleasing market and Arizona’s upcoming election for governor. Read the original article on bizjournals.com. The post How Valley CRE Brokers Think Rising Interest ..read more

Particularly with the proliferation of short-term-rental platforms such as Airbnb and Vrbo, single-family homes for rent in Greater Phoenix are a prime example of the intersection of residential and commercial real estate. In fact, many strictly commercial investors have moved into the single-family space due to the value, and are successfully operating large portfolios of homes for rent. The success of the short-term-rental (STR) model hasn’t been without its detractors, however, due to noisy parties, trash, parking, and other more serious problems such as a recent shooting at a property in S ..read more

Interest rates have trended up, and the Federal Reserve is showing no signs of stopping in its efforts to curb inflation by making borrowing more costly. Fed officials are attempting to avoid a vicious circle, in which the current 9-plus-percent annual inflation rate feeds expectations for further inflation—which then causes prices and wages to spiral higher. Several more hikes are expected through the remainder of 2022, bringing the federal funds interest rate to 2.5%, the highest since 2018. How can we expect these changes to affect investing in commercial real estate property in Phoenix? Th ..read more