Market Reports

Phoenix’s Life Sciences Market is on a Record Rise

by Jeff Shaw September 28, 2021

By Alexandra Loye, Senior Vice President, Healthcare & Life Sciences Services, Colliers Despite global and domestic market challenges from the pandemic, Phoenix continues to shine amongst its competitive Western cities. With Maricopa County being the fastest-growing county in the U.S., Phoenix offers employers a diverse, educated workforce, business-friendly environment and affordable housing options. Arizona’s economy is booming and experiencing record revenue growth, as well as personal income growth. From 2019 to 2020, Arizona led the nation (tied with Montana) in the category of highest personal income growth with a 7.1 percent increase. The state is also projected to add 325,000 jobs in the next 12 months. Phoenix’s life sciences industry has gained significant momentum during the past 12 months, with no slowdown in sight. The Phoenix Biomedical Campus (PBC) in downtown Phoenix is ground zero for life sciences development and tenant activity. The 30-acre campus is currently occupied by Arizona State University, the University of Arizona, Northern Arizona University, Translational Genomics Research Institute (TGen), OncoMyx Therapeutics, Calviri, Vidium Animal Health, and Exact Sciences, which recently acquired Paradigm Diagnostics and Ashion Analytics. The PBC is the ideal environment when it comes to collaboration and innovation for life sciences tenants. The 227,000-square-foot, …

September 28, 2021

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Arizona Industrial Market Reports Western Western Market Reports

Phoenix’s Industrial Market Remains Busier than Ever

by Jeff Shaw March 8, 2021

By Peter Batschelet, Principal, Lee & Associates In a year of unknowns, hypotheticals and uncertainties, the Phoenix metropolitan area and Maricopa County were the complete opposite. In fact, 2020 was a record-setting year in this region’s industrial market for several reasons. For starters, there was nearly 14 million square feet of new construction delivered. This is twice as high as any year in the past decade and roughly equivalent to the deliveries from the past two years. In addition, Phoenix set record absorption numbers to the tune of, ironically, 14 million square feet. Meanwhile, vacancy rates have decreased to roughly 7.7 percent and rents continue to see moderate growth. There does not appear to be an end in sight to the impressive growth. There is an additional 15 million square feet currently under construction. This space is both speculative development and build-to-suit opportunities from household names like Merit Partners, Prologis, Trammell Crow Majestic Realty and others. Ecommerce sales represent roughly 15 percent of the national retail industry, which means there is plenty of capacity for additional investment and capital into the Greater Phoenix area based on our population and anticipated growth. There remains plenty of upside for the bulk …

March 8, 2021

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Multifamily Trends Remain Positive in Phoenix

by Jeff Shaw September 24, 2020

By Brian Tranetzki, Principal, Taylor Street Advisors Multifamily is staying strong despite COVID-19. That’s because this product type was coming off an extremely hot market at the end of 2019 and early 2020 before the pandemic hit. The Phoenix metro area remains one of the few markets nationally with positive rent growth due to the steady population increase. Now, just months away from 2021, the market is faced with many unknown factors, such as unemployment, election outcomes, continued COVID uncertainty and the risk of eliminating 1031 exchanges. In turn, buyer sentiment also remains intense with a flurry of activity on those very exchanges. Development is still robust in the valley, with significant increases in downtown Phoenix, downtown Tempe and Chandler/Gilbert. There are currently more than 15,000 units under construction in the region. The building sizes are getting larger, while individual units are getting smaller. Developers are focused on building Class A properties with an emphasis on higher-end amenities, pool areas and concierge services. The class type determines whether it’s a landlord or tenant market. Tenants have several options in the Class A rental space, particularly as new units are delivered, which makes this a tenant-friendly environment. Class A vacancy is …

September 24, 2020

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Phoenix’s Growth Keeps The Multifamily Sector Hot

by Taylor Williams January 18, 2020

Stemming from the ashes of 2009 — a decade later and a decade wiser — Phoenix and the surrounding Maricopa County has exploded to outpace the national averages in both rent and job growth. In fact, the entire State of Arizona is booming in population growth and job production. The Census Bureau just released its American Community Survey “One-Year Estimates” in which Arizona was named the fastest-growing state in the nation with a year-over-year growth of 2.2 percent. The Phoenix MSA also experienced a 2.6 percent increase (as of October 2019) from the prior year ranking when it came to the largest job gains in the education and health services industries. The state also boasts a tax-friendly environment, pro-business governor, competitive workforce and one of the youngest median age populations in the country at 35.4. This has attracted a broad array of financial services, healthcare, manufacturing and tech companies that have been moving to Phoenix in droves, making Phoenix a diversified and balanced economy that is different than years’ past. What does all this mean? The need for housing is paramount and multifamily investors are reaping the benefits. Phoenix is able to absorb the roughly 7,500 new units developers are …

January 18, 2020

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Employment, E-Commerce, Experiences Drive Phoenix’s Retail Market

by Taylor Williams January 17, 2020

Ecommerce and generational shifts in spending patterns have spawned discussions regarding the health and future of retail. However, Phoenix has proven to be one of the most resilient and dynamic retail markets in the country. This resilience is a product of corporate and residential migration from gateway markets due to increasing regulation and costs of living. Maricopa County has been named the fastest-growing county in the country for three years straight by the U.S. Census Bureau, and is forecasted to add another 500,000 people by 2023. This population and income influx has the Phoenix retail market bucking national trends. Consumer sentiment remains at peak 2006 levels despite political uncertainty, without the artificial run-up in home values we experienced leading up to the financial crisis. Average vacancy rates have lingered in the high 6 percent range with active retail construction remaining tempered at around 1 million square feet. This is compared to more than 11 million square feet in 2006. Vacancy may fall into the mid- to high 5 percent range over the next two years — where it was in 2006 — barring any extreme economic events. Triple-net rents have averaged $16.30 per square foot in 2019 and have grown …

January 17, 2020

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Phoenix’s Strategic Growth Positions Industrial for Success in 2020

by Taylor Williams January 11, 2020

Phoenix’s industrial inventory is undergoing a period of growth due to the delivery of 2.2 million square feet of new product in the third quarter of 2019 and more than 4.7 million year to date (as of late November). In fact, the market has seen the highest amount of total industrial development year to date since 2007. While these deliveries have increased the industrial vacancy rate slightly, the overall vacancy rate for the area remains low at less than 7 percent. Absorption has been strong and is expected to remain so for the near future. Rental rates also continue to rise, though they are still at a considerable discount to many other West Coast markets. A high amount of development activity is still occurring, particularly in the southern portion of Phoenix. Much of this development is speculative rather than build-to-suit, which indicates developers are confident in the demand for industrial space in this market. Major factors for our growth have been significant job creation and in-migration of both residents and businesses, which have led to growth in industrial and construction jobs in the region. In fact, Greater Phoenix remains one of the top five metros for job creation in the …

January 11, 2020

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Office Demand Remains Strong in Phoenix, Though Concerns Persist

by Taylor Williams January 10, 2020

Phoenix experienced 1.8 million square feet of absorption and an overall office vacancy rate dipping to 17 percent by the end of 2019. Now that the New Year is here, the city is poised to continue its positive progression as healthcare, science, technology and the professional office service sector continue to show steady employment growth. Arizona ranked third in the U.S. with 2.6 percent job creation, as of the third quarter of 2019. That’s 74,000 new jobs for the year, including 6,900 jobs in the science and technology sector and 14,000 new jobs in the recession-resistant healthcare sector. Companies are focused on finding cost-effective, business-friendly office environments and submarkets with access to top talent, and Phoenix checks all those boxes. Much of the state’s top talent is Millennials and Generation Z who are increasingly willing to move to lower cost of living cities that boast a high quality of life. Arizona ranked No. 1 in inbound state migration in 2018, with 273,714 inbound arrivals. We expect to see similar positive net migration numbers in 2019. The Census Bureau estimates that Phoenix will be the fourth most populous city in the U.S., with a population of 2.2 million, by the end …

January 10, 2020

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City of Avondale Targets Growth in Multiple Sectors

by Taylor Williams January 4, 2020

The West Valley has a strong, talented workforce in the healthcare, finance, insurance and marketing industries, which has led to job growth increasing by 40 percent in the region, according to Westmarc. It’s no surprise that the West Valley City of Avondale, Ariz., located 15 minutes west of Downtown Phoenix, is experiencing pphenomenal growth. Much of this expansion is facilitated by Avondale’s location off two major freeways, including Interstate 10 and the Loop 101. The completion of the Fairway Drive interchange off I-10 in 2020 will only solidify the city’s growing reputation as a Southwest Valley hotspot. Avondale’s city council has also made economic development a top priority. The city’s economic development toolbox is filled with opportunities for developers who are looking to go West. Avondale boasts three Opportunity Zones, infill incentives, a Greater Maricopa Foreign Trade Zone and tax credits, among other economic development incentives. The city is working hard to make itself attractive to developers looking for a region with burgeoning growth and stable leadership. One such investor is the famous Chicago hot dog chain Portillo’s, which recently opened an 8,000-square-foot restaurant in Avondale. Other high-quality restaurants have been cropping up in the busy Gateway area around 99th …

January 4, 2020

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Phoenix Retailers Move To Be Upfront, Center

by Taylor Williams August 31, 2019

With all the changes occurring in retail over the past decade, the industry, as a whole, is being transformed before our eyes. These shifts have impacted how new retail development is taking place throughout the Phoenix area. It is also driving a significant change to how retail developers will operate over the next decade. The operational changes are dramatically affecting the prototypes of retailers. These changes are making it necessary for some retailers to relocate from an inline space at the back of a center to an outparcel with street-front visibility. It becomes even more complicated as more and more tenants are demanding a drive-thru. Panera Bread, Chipotle and Starbucks are just a few examples of retailers that have revised their real estate requirements to accommodate a drive-thru. Many retailers are also consolidating their total number of stores or downsizing their traditional physical footprint, which is also impacting centers. Some chains have even waved the white flag and closed their business altogether. These changes are driving the design of new retail projects throughout Phoenix. While the traditional configurations of regional malls, power centers and neighborhood shopping centers will always be a staple, the retailer’s shift to be up front and …

August 31, 2019

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Phoenix Market Demand Sustains Multifamily Devleopment

by Taylor Williams August 30, 2019

Multifamily rental demand in Metro Phoenix has been supported by higher education, while job growth has bolstered construction in the core and neighboring suburbs. Arizona State University has transformed the multifamily properties surrounding its large campuses in Tempe, Downtown Phoenix, Glendale and Mesa. The multifamily rental assets in the West Valley submarket have also been rejuvenated by Grand Canyon University. Thanks to these institutions and several others in the Greater Phoenix area, the growing skilled labor force has benefitted from job growth by supporting several Fortune 500 companies that have continued to increase their presence throughout the region. The recent expansions allow more graduates to remain in the Phoenix area and attract many new professionals to the market, ultimately enhancing rental demand in Phoenix and its neighboring suburbs. The rising number of residences has compressed vacancy rates in the metro as thousands of units are absorbed annually. This market demand will support the continued rise in rental prices and spur apartment development in the upcoming years. Apartment development has continued its strong pace in Phoenix. The metro is expanding its rental supply with about 8,250 units finalizing in 2019. Of this year’s deposit, roughly 2,600 units will be added to …

August 30, 2019

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