This post originally appeared on SimonCRE Insights Blog and is republished with permission. Find out how to syndicate your content with theBrokerList.

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Like a phoenix rising from the ashes, Phoenix is seeing a rebirth. Hit hard by economic downturn, Phoenix has slowly, or quickly depending on how you view it, found itself as one of the most thriving Metros in the county. Factors such as population growth, job creation, a rebounding housing market, and favorable commercial real estate activity make Phoenix Metro a more than attractive site for business and tenant expansion in the coming months and years.

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This is a market recovery that many analysts predicted might not recover for decades; a demonstration of not only the strong economic foundation of Phoenix, but also the strength of the national economic recovery.

 

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  • Q4 2016 saw roughly 600,000 SF of positive net absorption
  • Nearly 5 million SF of gross leasing activity in 2016 (roughly 1 million SF more than 2015)
  • Market wide vacancy dropped 4 basis points quarter-over-quarter, to 8.9 percent to end 2016
  • Commercial real estate development hit a six-year high in 2016, with 1.3 million SF delivered
  • Ranked 9th best market for retail investment, by NREI

 

And while the Phoenix retail vacancy may remain higher than many expected, or had hoped at this point in the recovery, there are still positive signs within the market. Brands like Macy’s, who has decided to close nearly 70 stores across the country this year, has said that none of those stores will be in Arizona. Tenants like Bush’s Chicken, a well-known quick-serve restaurant from Texas, picked the Phoenix Metro market as its first outside of Texas.

The increases in population and strength of the residential real estate market may be a significant indicator of where we might see the commercial real estate sector headed. Job growth should also lead to higher consumer spending, opening the doors of opportunity for a stronger commercial real estate sector as brands look to expand either within, or into Phoenix’s strong market.

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