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 …
Phoenix is known for its strength as a logistics and distribution market. This is particularly true in the Southwest Valley, which has become the poster child for all that makes Phoenix industrial space great: strong population growth, a deep and qualified workforce, an abundance of land and building opportunities, and a lower-cost, business-friendly regulatory environment. As of the second quarter, these benefits helped the Southwest Valley emerge as No. 1 in the nation for industrial prospects looking for space (based on interest from at least 83 tenants with a maximum requirement of more than 30 million square feet). These prospects include national and regional distribution centers, third-party distribution providers, major ecommerce users, and a robust food and beverage sector led by companies like Fairlife Dairy, UFI, Ferrara Candy and Red Bull. It also comes from the reshoring of manufacturing from organizations like Hutamaki, Ball Enclosure and Anderson Windows. Data centers continue to flock to Phoenix as well, purchasing about 2,000 acres over the past 24 months and positioning the Valley among the nation’s top five U.S. data center markets. Data center interests like Microsoft, Vantage Data and Google have selected Phoenix for its low natural disaster risk, ample affordable land …
It isn’t just temperatures that are scorching in the Phoenix metro this summer. The multifamily rental market is hot as well; and vigorous demand is coming from both renters and investors. Investors are snapping up apartment properties and paying hefty prices. Buyers spent $3.72 billion on 94 Phoenix-area apartment complexes in the first half of 2019, a 41.8 percent jump from the first half of 2018. Sales in the $50 million range experienced the greatest rate of acceleration. The Driving Factors Behind Strong Demand Phoenix is the fastest-growing city in the U.S., according to recently released data from the U.S. Census Bureau. The region saw an increase of 25,288 new residents between 2017 and 2018, topping all other U.S. cities. One reason for that growth is that Phoenix remains more affordable than many other large U.S. metros. People are flocking to the Valley from high-cost, high-tech cities like Los Angeles and San Diego. Phoenix also boasts a thriving job market that includes a fast-growing, high-paying tech sector. Other booming industries include bioscience/healthcare and financial services. In fact, the Phoenix metro led the U.S. for new jobs created from May 2018 to May 2019 with 66,500 non-farm jobs, representing 3.2 percent …
Greater Phoenix has re-cast itself in this real estate cycle. It is no longer expected to play the “boom-to-bust” role in the office sector. The metro area has definitely expanded its breadth of industries, reaching beyond homebuilding and professional services to now feature some of the country’s leading insurance corporations, technology companies and medical innovators. This diversification promises to buffer any future fall in nationwide economic activity. Greater Phoenix continues to lead the country in job creation, adding an estimated 66,500 net new jobs between May 2018 and May 2019, marking a 3.2 percent increase. These jobs are coming from companies like Carvana, AllState and WageWorks. Phoenix has benefitted from great exposure from in the national media, which has matriculated to corporate America and attracted broad attention. The Greater Phoenix MSA boasts a phenomenal combination of attractive cost of living, growing wages and an enviable lifestyle. This package of appealing factors has allowed Phoenix to garner more than its fair share of corporate expansions and relocations throughout the Western U.S. Demand has been strong for office space in the area. However, a diminishing availability of quality, speculative space is creating a battle for the tenants. Sizable users wanting signature spaces …
Seattle has always been a strong industrial market, known for its busy ports and, more recently, its position as one of the most successful tech hubs outside of Silicon Valley. As the global economy continues to shift toward the Internet of things (IoT), Seattle industrial space is catapulting into a new category of demand. That growth is spurred on by companies like Microsoft, Amazon and Google, which continue to expand their footprints here and generate a growing inflow of technology, population and industrial requirements. The ports of Seattle and Tacoma were ranked among the busiest in the nation at the end of 2018. They collectively processed nearly 3 million TEUs (or 20-foot equivalent shipping container unit) in volume. Year-over-year, Seattle’s TEU has also grown by 27.5 percent, one of the fastest growth rates of all U.S ports. This activity has kept the Puget Sound industrial vacancy rate at 4.9 percent as of the second quarter of 2019. Industrial inventory in close-in areas of South Seattle like the Georgetown submarket has tightened to an even lower 1 percent vacancy rate. Rents, meanwhile, have increased north of $1.20 per square foot as more and more buildings are converted to creative office and …
Notions of Seattle as a grunge-rock town with logging roots are in the rear-view mirror. While Seattle’s past is marked by the 1850s Klondike Gold Rush, 1970s Boeing Bust and 1990s Microsoft Millionaires run, today’s economy is dotted with news of exceptional growth from Apple, Amazon, Facebook, Google and Salesforce. To say that Seattle’s economy is both booming and diversified is an understatement. A benefactor of such continued growth is the regional rental market. Jobs, Jobs, Jobs Ecommerce juggernaut Amazon has assembled 12 million square feet of Class A office space in Downtown Seattle over the past several years. Now, Bellevue — not more than 10 miles from Downtown Seattle — is receiving attention from Amazon with commitments for 2 million square feet. Adding to that, Apple is committing to more than 625,000 square feet of office space; Facebook’s footprint is around 2.7 million square feet; and Salesforce has chosen Seattle as its second global headquarters. Given high wages and more economical for-rent and for-sale office and housing space (on a relative basis), it’s no surprise Seattle still has runway for sustainable economic growth. Development Pipeline Apartment developers seized upon Seattle’s modern day Gold Rush. Developers added 55,000 apartment units …
A decade ago, the Seattle office market was still reeling from the effects of the global recession. Total downtown vacancy had reached 14.9 percent with nearly every submarket from the Central Business District (CBD) to Lake Union experiencing some form of negative absorption. Total vacancy today is slightly more than half of what it was back then, hovering at around 7.7 percent. This is despite the total net rentable area growing by more than 11 million square feet. Seattle has also shifted from largely being considered a secondary market to one of the leading real estate hubs in the nation, thanks to consistent talent and demand from the engineering, aerospace and technology industries. Seattle currently ranks second behind San Francisco in our annual Scoring Tech Talent report. And yet, while our extensive growth has been a benefit to the office market, a new problem has cropped up in the face of this progress: availability. The rise of coworking, as well as the surplus of partial floor spaces, has been a benefit to smaller companies in the midst of early stage growth and expansion. In fact, there are more than 700 options in Downtown Seattle for smaller tenants, primarily under 15,000 …
Strong economic growth on the West Coast from the booming tech industry has benefited Portland’s economy. As a result, considerable employment and population growth, particularly from the Millennial generation, has elevated the industrial market significantly in recent years. According to CBRE, demographic growth and the national shift to online consumption have contributed to a steadily decreasing industrial vacancy rate since 2010, which reached 3.3 percent in early 2019. Demand for industrial space began to pick up speed about five years ago and has since boosted asking rents 45 percent. Build-to-suit construction projects were a growing trend in 2018, delivering more than 2.9 million square feet for existing tenants, the largest developments being the Troutdale Reynolds and Rivergate. To date, 2019 construction has been exclusively speculative with half a million square feet delivered thus far and 41 percent preleased. An additional 1.4 million square feet is under construction and expected to deliver by year-end 2020, none of which is pre-committed. At the same time, demand for industrial space of 100,000 square feet or greater accounts for 20 percent of users in the market. The speculative construction projects delivering during the next 18 months should provide some supply options for users of …
Consistent investment trends, a steady demand for tenants, stable in-migration and several new additions to the skyline have provided Portland with a strong first half of 2019. With more than 100,000 square feet of positive net absorption this year, the Portland office market shook off any lingering negative sentiment from 2018 and started the year strong. Portland has built a reputation as a second outpost to cities like Seattle and the Bay Area. Companies tend to initially set up small offices before quickly realizing Portland is a viable alternative to other larger hubs. In-migration remains strong but the major growth the market has experienced recently has been from homegrown companies ramping up or expanding their operations. We’re continuing to see office rents grow at almost 12 percent year over year. Portland office rents average $32.12 per square foot, making them nearly 60 percent cheaper than San Francisco and 25 percent cheaper than Seattle. The city is also well situated to attract companies that are being priced out of primary markets but still need to be geographically close. When you layer on our cost of living and high quality of life, Portland becomes even more attractive, which also contributes to its …
Portland’s retail market is supported by steady employment gains that are luring new residents. Employers have created almost 23,800 jobs over the past 12 months, while the metro added nearly 27,400 people. This is a population growth rate that is nearly double that of the U.S. Household income also advanced at a faster clip than most of the country. Portland’s median household income jumped 5.3 percent over the past year. This is well above the national level of 3.6 percent, providing residents with more discretionary spending power. Retail sales have surged 5.8 percent year over year as a result, which is significantly higher than the U.S. rate of change. These growth trends are expected to continue through 2019, boosting the retail sector. The need for retail space may be escalating, but construction remains measured. This has funneled expanding retailers into the dwindling supply of existing space as vacancy tightens. Developers added 319,000 square feet year over year in March, slightly lower than the 327,200 square feet 12 months earlier. Deliveries will remain sparse as builders have less than 300,000 square feet under construction. Much of the new supply is ground-level space in mixed-use office or apartment projects in walkable, urban …