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

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

Multifamily has been scorching hot in the Phoenix market during the past few years, but the surge in build-to-rent communities has been the most astonishing performer of all. Also known as BTR or BFR (build for rent), this is a unique segment of the single-family rental (SFR) market: Entire communities of detached, single-family or attached townhouse-style dwelling units that are specifically built to be rented rather than purchased. While different developers have different operating models, most are gated communities with one-to-three-bedroom homes with small backyards and a wide range of up ..read more

For the fifth year in a row, the Phoenix metro area ranked as the fastest-growing city in the United States, according to the US Census Bureau. Over the past decade, Maricopa County’s population has increased by 15.8%. In the process, the growth rate for Phoenix investment properties has also created top opportunities in Arizona. Behind the growth is Phoenix’s appeal as a business-friendly destination, which has spurred local investment as well as out-of-state interest from pricier coastal markets in California, such as San Francisco, Los Angeles, and San Diego. There are several factors at pl ..read more

Nationally, the largest office commercial real estate markets are showing signs of recovery, and the NAIOP Research Foundation is projecting a strong resurgence through 2023. When we last addressed this sector in August, we discussed who has the upper hand in the Valley’s office market.  As we head into the final weeks of 2021, we ask: Is Greater Phoenix following or lagging the positive national trend, and what does the future look like? Based on the metrics of vacancy rates, direct and sublease space, and the volume of leases coming up for renewal, it is clear that challenges remain in ..read more

The Greater Phoenix multifamily market continues to maintain a torrid pace, driven by a combination of population growth, an economy that’s among the country’s strongest, and persistently pricey residential real estate. While there are indications that Phoenix home prices are starting to stabilize, many would-be buyers remain in locked in rental mode. Thanks to that unrelenting demand, rental rates have persisted in their upward surge. Unfortunately, renters can’t anticipate a break anytime soon, with Yardi Matrix projecting a rise of 6.1% this year. The fact that Phoenix’s average rental rate ..read more

Overview of the Intersection of Real Estate in Arizona There’s a tendency to view commercial real estate and residential properties in Greater Phoenix through different lenses, but it’s also a useful exercise to observe them together, as components of the state’s larger economy. At the risk of oversimplifying complex economic and social factors, Arizona’s solid economy (fourth highest GDP growth in the U.S.) and relatively affordable cost of living and commercial properties in recent years (minus the downward blip of COVID) have attracted more people and jobs. In turn, that spurred housin ..read more