Monthly Archives: October 2013

Q3 2013 – NAI Horizon Industrial Market Report

The industrial sector has leveled out after years of positive activity even during the recession. In the past several years, the sector performed better than other sectors in Metro Phoenix due to high demand and low inventory. After an impressive first quarter of this year with 1.3 million SF absorbed, the second and now third quarter of 2013 have not followed suit. Vacancy has ticked higher this quarter and last primarily due to large deliveries of distribution space, over 3.9 million SF this year, and obsolete space that continues to plague the market. At least 25% of the industrial inventory in Phoenix can be considered obsolete, while some areas, such as the Sky Harbor submarket, are looking at an even higher percentage of untenantable space. This leaves room for new development that is currently needed to meet demand, and can adapt to the new needs of the changing market. In the Southwest Valley, shovel ready sites are awaiting the possibility of large users moving into the market, either from leaving less hospitable markets, or from the change e-commerce continues to have on the industrial and retail markets. As the traditional shopping experience evolves, larger warehouses to support online shopping will increase the amount of big box spaces needed. However, in preparing for these possibilities, and as larger tenants have hit the Phoenix market, these big box spaces have skewed the real picture of vacancy in the valley; smaller freestanding buildings, 10,000-50,000 SF, continue to be in higher demand. Despite the lull seen in the last two quarters as users and investors proceed cautiously due to economic uncertainty, the long term prospects for the Phoenix industrial market look positive.

Q3 2013 – NAI Horizon Office Market Report

While the first half of the year proved slow for the Phoenix office sector, the second half of the year has started off on the right foot. Net absorption posted an impressive 1,098,466 SF for this quarter, only the second quarter to break the million SF mark since 2007. Valley wide vacancies continue to constrict, and average rents continue to slowly rise. The combination of these factors points to a steadying of the sector and paves the way for real recovery.

NAI Horizon hosts inaugural MRED Professional Development Series

On October 1, 2013 ASU’s Masters of Real Estate Development (MRED) Alumni Group presented its inaugural Professional Development Series at NAI Horizon. A total of 30 MRED Alumni and current students gathered to hear Eric Brown, formerly of Artisan Homes and currently with William Hezmalhalch Architects, provide a developmental history of downtown Phoenix. In addition, Mr. Brown articulated his vision of where the urban Phoenix market is going by sharing information and slides of projects he is currently engaged in.

NAI Horizon, a commercial real estate company, graciously hosted the event in its conference room on 44th and Thomas. Ian Turner of the NAI Horizon’s Valuation Services Group (VSG) assisted the MRED Alumni board in organizing the event, which is a new concept for the six year old alumni group. Mr. Turner (MRED ’08) presented the board’s vision for creating a venue which will stimulate the group intellectually as well as help the membership develop professionally.

Stewart Title and its business development officer, Phyllis Dumond, sponsored the event. Ms. Dumond had this to say about Stewart Title’s support of the MRED Alumni Group, “As an alumni of ASU, I am always interested in supporting programs that provide continuing education that keep our professionals engaged at a higher level which ultimately benefits our community!”

The event began promptly at 5:30 PM with soft drinks, beer/ wine and catered appetizers provided by Stewart Title and NAI. This enabled alums to meet and greet each other for the next half hour. At 6 PM Mr. Turner presented the MRED Alumni Board’s vision for creating this series of events as well as a presentation on how to be a better conversationalist. This is particularly pertinent to real estate professionals as they often attend networking events and meet new people. Each MRED Professional Development Series event will feature an interesting topic as well as have this type of professional development component as a core value-add.

Many students and alums visited for roughly a half hour after Mr. Brown finished his presentation on the history and future of Phoenix’s downtown. According to Dan Paulus, President of NAI Horizon’s Valuation Services Group, “This was a great gathering, and shows how everyone enjoyed re-connecting at the event.” Several alums had the following comments to describe the event. “Eric Brown was very informative and a creative developer, also a good turnout. Looking forward to upcoming programs.”

The next event in the series will be held on December 3rd and is a guided tour of DPR Construction’s offices in Phoenix which is the largest Net-Zero commercial projects in North America. It is Platinum LEED certified and consumes less electricity than it produces.