I attended the ASU Real Estate Council, hosted event yesterday, that Mark Strapp moderated. Pete Bolton at NGKF and Chris Toci at Cushman & Wakefield were the panelists. Here are some interesting points that I walked away with:
-There are approx. 240,000 single family rental (SFR) homes in the metro – estimated occupancy is 98% (there is no real way to track the occupancy rate for this rental stock)
-There are another +/- 100,000 of townhome/condos for rent
-Rental rates on the SFR are rising
-Concern is the number of high end/luxury apartments being built
-Comment made about new luxury apartments – majority, if not all, is east of I-17.
-More opportunities are coming from CA to AZ
-Big box industrial has very little product on the market for sale
-Core buyers are looking for the leased opportunities
-Belief is there was a re-allocation by the core buyers for this product type
-2015 will be the start of the next construction wave
-Over half a dozen of the spec offices planned/being developed are in the East Valley
-Value add buyer is actively looking (value add being defined as 75-85% occupied)
-Stabilized assets are less attractive right now
-It was stated that +/- 17% of the retail sales occurred via mobile or online
-There was not a lot said about this market because this was not a focus of this group. However, I believe the previous comment is incorrect and closer to 6% per a recent ISCS publication. Further, I would like to state that occupancy rates are trending up and so are lease rates.
-They have to go up and cap rates will follow
-Challenge for a seller/buyer is that the gains made in the NOI will be eroded by the cap rate increases
Overall, the panel and the attendees were optimistic about Arizona and the long-term viability of commercial properties.
Photo Credit: Business Man Standing Near A Financial Graph Stock Image By cuteimage Source: freedigitalphotos.net