Western Market Reports

Phoenix Retail Market Shows Strong Growth, Resilience

by Jeff Shaw February 7, 2024

— By Brian Polachek, Senior Vice President, SRS Real Estate Partners — The holiday season is upon us, and as 2023 draws to a close the real estate community turns its focus towards the future, particularly to what 2024 holds. Let’s look at recent developments and future expectations of the Phoenix retail market, a sector that has shown remarkable growth and resilience. Phoenix’s retail landscape has experienced a significant growth period, primarily due to a combination of factors including substantial population increases, strong consumer spending, minimal store closures and limited new retail space has been built. This surge in growth is largely attributed to Phoenix’s rising appeal as a place to live as well as a business-friendly environment. The influx of new residents and businesses has created a robust consumer base, driving up spending and providing a diverse market for retailers. Remarkably, the Valley has seen positive absorption for nine consecutive quarters, totaling 4.2 million square feet in the past year alone. As a result, Phoenix has become one of the leading U.S. markets in retail demand, bringing vacancy rates down to a record low of 4.5 percent, according to CoStar. This ongoing demand signifies not only the market’s current …

February 7, 2024

Colorado Market Reports Retail Western Western Market Reports

Denver Retail Market: Is a Storm Brewing?

by Jeff Shaw February 2, 2024

— By Tami Lord, Senior Vice President, SRS Real Estate Partners — No longer the Cowtown of ages past, Denver has developed into an economically diverse, midsized city as demonstrated by both the residential and business growth over the last decade. Major companies now include Denver on their target list for potential headquarters, regional hubs, and distribution locations. Compared to the coastal markets, Denver is more affordable and offers a very desirable quality of life for employees, helping to put Denver on the short list. The pandemic only increased Denver’s growth trajectory. All of a sudden, people were able to maintain their current employment while living in a setting known for over 300 days of sun annually with easy access to hiking, skiing, biking, camping…the list goes on. The population growth has spurred rising housing and land prices. Coupled with rising construction costs, increasing real estate taxes, long permitting times and a tight employment market, traditional retail development has slowed. The lack of significant new development has pushed retail vacancy to a near-record low of 4.1 percent across the metro, according to data from CoStar. Many downtown retail markets across the country have been hit with higher vacancy rates in …

February 2, 2024

California Industrial Market Reports Office Western Western Market Reports

Orange County’s Industrial Market Thrives, but Office Market Struggles

by Jeff Shaw January 30, 2024

— By Robert Ritschel and Andrew Herron, Senior Vice Presidents, The Saywitz Company — The industrial sector for Orange County commercial real estate continues to be one of the strongest in the country. Vacancy rates in Orange County for industrial space remain at approximately 2 percent. What this means for tenants out in the marketplace is a continued struggle to find viable space. When combining limited availability with the fact that some of the buildings are older or obsolete, or may have lower ceiling height or reduced power, this makes the challenge even more difficult. With that said, we have seen the sales prices for industrial space level off and we have also now, for the first time in the past several years, begun to see landlords offer free rent and move-in concessions, and come off of their asking prices. The days of five or 10 different tenants looking at one available space in the marketplace seem to be over, and those with good credit looking to sign long-term leases clearly stand out from the mom-and-pop operator that may be looking to sign a short-term lease. Landlords on the industrial side appear to be much more conscious of the changing …

January 30, 2024

Market Reports New Mexico Retail Western Western Market Reports

Albuquerque’s Retail Boom Settles Down

by Jeff Shaw January 26, 2024

— By Anthony Johnson, President, Pegasus Group and Western Regional Director, X Team Retail Advisors; and AJ Johnson, Associate Broker, Pegasus Group — Looking back on the Albuquerque retail market for 2022 and 2023, I have to say that 2022 was the height of our boom in terms of the sale/lease of shopping center and freestanding pad sales, built-to-suit opportunities and redevelopment opportunities. The top consumers of these product types were chicken (QSR), coffee, car washes and cannabis, or as we affectionately called them, the “Four C’s.” Due to the sheer amount of activity in the pad user market, underutilized was a key word during this time. We saw vacant pad sites that were once considered unleasable or unsellable, perking the interest of investors, tenants and developers. By 2022 the negative effects of the pandemic had subsided, which resulted in the most robust year we’ve ever seen in terms of pad sales/leases. I’ve never seen anything like it. It was like a crescendo… and then, the “music” stopped. It was February of 2023 when the music started to get fainter. By August 2023, the music stopped, and now we’re seeing the aftermath of this. Meaning, many of the pad sites …

January 26, 2024

California Market Reports Retail Western Western Market Reports

San Diego’s Retail Investment Market Outlook

by Jeff Shaw January 23, 2024

— By Jeff Lefko, Executive Vice President, Hanley Investment Group Real Estate Advisors — Hanley Investment Group is expanding and opening its newest office in San Diego in early 2024. San Diego, the eighth most populous city and the fifth largest county in the United States, ranks second only to Los Angeles County in California, boasting a population nearing 3.28 million. With a substantial GDP of $206 billion, San Diego holds the 17th largest metropolitan area position in the U.S. and the fourth largest in California. The city’s economy thrives on defense, tourism, international trade and research/manufacturing sectors. Notably, in 2022, San Diego experienced an 8 percent growth in life science employment, reinforcing its position as a premier life science research destination. Attracting 28.8 million annual visitors, it stands as a prominent U.S. travel destination, generating approximately $13.6 billion in yearly spending and employing 214,000 San Diegans directly and indirectly. San Diego’s robust economy, diverse population, quality education, and prime location render it a desirable hub for commercial retail investment. The business-friendly climate further enhances its allure, while the limited supply of new retail construction helps maintain stable real estate fundamentals. The changing economy and rising interest rates have caused …

January 23, 2024

Market Reports Nevada Western Western Market Reports

Population Growth Drives Development in Southern Nevada

by Jeff Shaw January 19, 2024

— By Jeffrey Swinger, Executive Vice President | Las Vegas, Multifamily Investment Sales, Colliers — Las Vegas is on a roll right now, continuing to raise the bar year after year, and we are bullish on the long-term outlook of Southern Nevada’s future. UNLV’s Center for Business and Economic Research predicts that Southern Nevada’s population will gain 41,900 new residents in 2023 and increase another 2.4 percent in 2024. This wave of growth, coupled with strong local economic activity and enhanced infrastructure investments, has created more jobs and more demand for housing. With more than $8.12 billion of new major projects delivered in 2023, there is another $2 billion currently under construction with plans to deliver in 2024 and 2025. Additionally, there is another $17.25 billion of announced and proposed projects keeping Las Vegas’s momentum moving forward. Significant projects that were delivered in 2023 include the Fontainebleau, the MSG Sphere and the inaugural Formula 1 Heineken Silver Las Vegas Grand Prix. The Fontainebleau is the latest hotel/casino along the Strip, valued at $3.7 billion, and will add 3,644 rooms to the hotel inventory count. The MSG Sphere is Las Vegas’s newest entertainment venue featuring the largest spherical building in the …

January 19, 2024

California Market Reports Western Western Market Reports

Growth Continues in the Mojave River Valley

by Jeff Shaw January 17, 2024

— By Joseph W. Brady, CCIM, SIOR, President, The Bradco Companies — A population boom has brought houses, companies and retailers to the High Desert also known as the Mojave River Valley. The “High Desert” used to be a term that referred to one area: the northern region of San Bernardino County that is beyond the Cajon Pass. As such, many other “High Desert” popped up, including the nearby Joshua Tree Area, in addition to namesakes in Arizona, Nevada and Oregon. That led this particular area to be rebranded as the Mojave River Valley, notes Joseph W. Brady, president of The Bradco Companies in Victorville, Calif. As a long-time, 35-year resident, of the Mojave River Valley, he is the longest serving commercial broker in the region. What is the current state of commercial real estate in the Mojave River Valley? Retail is rather steady, with each of the cities — Apple Valley, Adelanto, Hesperia, and Victorville — all seizing new opportunities for commercial. Sprouts grocery stores (remodel of the former Toys”R”Us) are coming into Victorville and the Town of Apple Valley. We also have many smaller national tenants that continue to expand in the retail marketplace. Retail vacancy levels continue …

January 17, 2024

Hawaii Market Reports Retail Western Western Market Reports

Navigating Hawaii’s Retail Landscape: Adapting to Shifting Tides

by Jeff Shaw January 16, 2024

— By Jon-Eric Greene, Colliers — Hawaii has historically been home to many of the nation’s top grossing retail locations (as measured by gross sales), including one of the highest grossing regional malls in Ala Moana Center, and the world-famous retail street, Kalakaua Avenue in Waikiki. However, since COVID shutdowns, Hawaii retailers and shopping centers have struggled to recover. While the tourism and hotel markets have bounced back, an important visitor demographic — the international shopper — has yet to return. Tourism is Hawaii’s No. 1 industry, with almost every dollar circulating through the economy tracing back to visitors. In 2019, Hawaii welcomed a record 10.4 million visitors. However, in 2020, arrivals plummeted to 2.7 million visitors due to the pandemic. The state experienced rebounded visitor numbers in 2021 and 2022 of 6.8 million and 9.2 million visitors respectively and expected to end 2023 with 9.3 million visitors. The visitor profile has changed dramatically, however, impacting many retailers and shopping centers. In 2019, around 3 million visitors were international, with over 50 percent (1.58 million) coming from Japan. In 2022, only 900,000 of Hawaii’s 9.2 million visitors were international, including just 192,500 Japanese. So, while overall visitor counts to Hawaii …

January 16, 2024

Market Reports Nevada Western Western Market Reports

Steady Activity Continues in the Las Vegas Market, Despite 2024 Headwinds

by Jeff Shaw January 12, 2024

— By Paul Sweetland, SIOR, Vice Chairman, Colliers Doherty Industrial Group — Throughout 2023 we were often asked if the Las Vegas industrial market had “missed the memo” on the slowdown since other western markets were experiencing a slowdown that we had yet to see. With record under-construction numbers and net absorption numbers being on pace to finish the year with the second highest total of the last five years, Las Vegas didn’t appear to be slowing down. However, there are certain sectors that show initial signs of a pending change. Land Sales: Land sale transactions have seen a 75 percent drop from the prior year. Peak land pricing was $36.00 per land square foot in the summer of 2022, and by the fourth quarter of 2023 it had dropped 25 to 35 percent as demonstrated in the limited closings that occurred. Although lease rates continued to increase, developer underwriting had seen significant changes in exit CAP rates along with debt, equity and construction financing due to an unstable interest rate environment with the Feds continued rate increases at the fastest pace in 40 years. Lower land pricing or significant lease rate increases are going to be necessary for the …

January 12, 2024

California Market Reports Office Western Western Market Reports

Long Beach Office Market Continues Evolving with New Industries, Growth In Suburbs

by Jeff Shaw January 5, 2024

— By Jason Fine, Managing Director, JLL — Situated along the Southern California coast between Los Angeles and Orange County, the City of Long Beach continues to be a strong option for businesses and residents. The city has recently delivered low- and median-income housing, in addition to luxury product, with more of each in the planning stages. This has allowed Long Beach to continue experiencing growth from aerospace, port-related businesses, oil and professional services. A few companies that have recently relocated to Long Beach include Blue Shield, Fluor, Relativity Space, SpinLaunch and Vast. Additionally, the city’s economic development department and newly elected mayor have taken a proactive stance, implementing strategies and marketing the city as a business-friendly destination. While the regional and national office leasing trend is seeing many tenants going to a hybrid model, the Long Beach office market has seen a steady increase in vacancy and rental rates despite no new office building supply being added to the market since the pandemic. For the third quarter, the total Class A and B office vacancy (including sublease space) for downtown Long Beach is at 33 percent, with rents sitting at $2.71 per square foot, per month (full-service gross). Suburban …

January 5, 2024

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