Arizona Commerical Real Estate Services

Phoenix Industrial Sector Builds on Recent Successes

January 17th, 2012 | Posted by Matt DePinto, Research Manager

The Phoenix Industrial Market continues to build on last quarter’s success as figures show a strong reduction in overall vacancy and a strong rise in absorption. Rental rates have rebounded slightly from their low point in the second quarter of 2011. Along with this good news are a few sobering facts which still point to a sector that continues to struggle to return to historic norms.

Lease transaction volume is off pace by half from last quarter in the number of deals and in total square feet. The majority of space being leased is for larger, corporate users. Owner/user deals are still off from historic highs due to tight credit and lack of startup capital. Sales transactions improved this quarter in total dollar volume to $249.2 million compared with last year’s $164.4 million, however, the number of sales transactions is the lowest since third quarter of 2009. This shows that investors are still focused on large, premium properties to build their portfolios. Investors remain relatively risk adverse and are still focused on easily structured transactions. Cap rates for this quarter have posted at 7.91%.

The Phoenix Industrial vacancy rate continues to improve and now stands at 13.9% compared with 14.8% last quarter. Absorption rates are up again for the seventh consecutive quarter with a substantial gain of 2,868,909 square feet (SF). This is over 1.2 million more SF absorbed this quarter compared with the last. The Southwest submarket had the vast majority of absorption while the Sky Harbor submarket was the only one with negative absorption at (163,915) SF.

The big news is that overall absorption is up over 6.66 million square feet (MSF) for 2011. This is a strong indicator of healthy activity and modest demand. With very little new product delivered in the previous six quarters, this quarter showed a strong 570,673 SF of build-to-suit activity. Construction posted 2.8 MSF for the fourth quarter; however, two enormous manufacturing projects for Intel and First Solar make up 2.2 million of that total.

Overall annual rental rates are rising incrementally each quarter and currently stand at $6.36 PSF ($0.53 per month). Rental rates are still depressed from historic levels and are expected to remain comparatively low throughout 2012. However, for the past few quarters, market activity is up and momentum is beginning to head in the right direction.

The largest lease transaction posted this quarter was the Cornerstone Services lease of 337,897 SF of distribution space at 7210 W Buckeye Road in Phoenix. In the top sales transaction for the quarter, NY-based REIT Crexus Investment Corporation spent $33.25 million for 3 distribution buildings totaling 629,764 SF at Papago West Industrial Park. The cost PSF was $52.80.

 The ever resilient Industrial sector marches steadily forward, albeit slower, as the health of the overall economy continues to improve slightly. As consumers begin spending again, inventories will need to be replenished and products will need distribution. These conditions are already beginning to take shape and should expand as we move through 2012. A national move by U.S. companies to onshore some operations previously moved overseas will also increase demand on existing building inventories.

Category: Industrial, Inside Perspectives, Market Trends, Press Release | Comments (0)

Economic Outlook Looks Positive Going Into 2012

December 28th, 2011 | Posted by Matt DePinto, Research Manager

After a sluggish start to the year, the fourth quarter brings with it more positive news on the U.S. economy and the potential for greater movement in 2012. Aside from the very important European debt crisis which may still cause problems here, leading indicators such as unemployment, manufacturing output, GDP and consumer confidence have all moved in the right direction. This bodes well for the commercial real estate industry in the coming year.

One of the more stubborn indicators, the creation of jobs, has been showing signs of positive movement over the past several months. The U.S. unemployment rate has dropped to 8.6 percent, the lowest since March of 2009. Experts had hoped for a much quicker drop in unemployment. They had not anticipated such a reluctance to hire again by small businesses. This modest increase in employment has fueled other indicators that have remained dormant for some time. This positive trend is expected to continue and perhaps accelerate as we move into 2012. Greater hiring will help struggling commercial sectors.

Manufacturing output has increased in the U.S. despite falling sharply in Europe and China. The pent up demand for durable goods such as automobiles has fueled growth.  American car companies are exceeding expectations on output and could post double digit gains this year. Another area of growth is in petroleum products such as jet fuel, heating oil and gasoline according to Bloomberg News. For the first time since 1949, the U.S. is exporting more oil-based fuels than it imports. This also creates an environment where gasoline prices decline making other industries such as steel, more competitive abroad.

The U.S. Gross Domestic Product percentage continues to grow despite a dip earlier in the year. Moody’s Analytics expects the U.S. GDP to rise by 2.6% next year with the caveat that government policymakers move to enact strong fiscal measures. With stubborn unemployment rates still higher than expected, interest rates and inflation will remain low for the foreseeable future. Property and Property Research, PPR, reports that business investment and consumer consumption are the two biggest drivers of GDP growth which was near zero in the first quarter of 2011. The trajectory is expected to be strong into 2012.

Consumer confidence has seen the largest single monthly increase in more than eight years. The Conference Board’s index rose to 56 from 40.9 in November. Higher holiday shopping numbers, auto sales and home purchases in many markets have pushed the index into positive territory. Gasoline prices and low inflation have given consumers some confidence and a feeling they have money to spend for the holiday season.

Of course, any of these situations can be undermined by political grandstanding, the Euro crisis, the still weak housing sector or international political or environmental catastrophes. It seems that momentum is building toward greater expansion of the U.S. economy and the benefits of this expansion will begin to dominate the discussion going forward. Recent events in North Korea could create instability for China which could translate into increased demand for American-made goods and resources.

Category: Inside Perspectives, Market Trends | Comments (0)

NAI Horizon Selects Barry Bartle as New Property Management Division President

December 9th, 2011 | Posted by Matt DePinto, Research Manager


Barry Bartle

Phoenix, AZ (Dec. 6, 2011) NAI Horizon, one of Arizona’s oldest full service Commercial Real Estate Companies, has selected Barry Bartle as President, to lead the strategic re-positioning of it’s Property Management Division. “Barry will also have an ownership interest in our Property Management company” according to Thad Seligman, President and CEO of Horizon Real Estate Group. “Our goal over the next several years is to grow the NAI Horizon Management portfolio to 10 million square feet of Office, Retail and Industrial properties and Barry deserves to have ownership in what he builds”.

With an impressive track record in Institutional Property Management spanning over thirty years, Bartle has led property management divisions for such firms as RREEF, Pacific Office Properties and Cushman and Wakefield. His extensive background in Asset Management and Commercial Property Services includes the supervision and direction of over $2 billion dollars in real estate investments for more than 100 clients. Barry has been the recipient of numerous Property Management Service Awards and Letters of Recognition within the industry.

“NAI Horizon has served clients in Arizona and Nevada through its Property Management, Brokerage and Appraisal Divisions for over 20 years.” according to Bartle. “This alignment of all the Horizon operating Divisions will create efficiencies in the delivery of NAI’s extensive menu of services to better serve NAI Horizon’s clients.” Bartle also points out that; “The NAI Global Management Group manages over 300 million square feet nationally. NAI Horizon will expand its current managed portfolio by leveraging these national platform relationships.”

“Barry has been chosen to participate in the NAI Global Strategic Planning Symposium in 2012, designed to define and develop NAI’s worldwide Property Management Strategies”, added Seligman. “This is an important role for Barry and one which evidences his experience, knowledge and reputation as a Property Management Executive. We are confident that under Barry’s leadership as President of the Property Management Division we will achieve our goal to be the leading property management company in Arizona.”

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About NAI Horizon
Established in 1992, NAI Horizon is a full-service commercial real estate company located in Phoenix, Arizona. NAI Horizon offers a full range of comprehensive real estate services including property management; brokerage and appraisal services to local, national and international clients. Serving the greater Phoenix metropolitan area, NAI Horizon is a member of the NAI Global commercial real estate network providing real estate solutions to 350 offices in 55 countries worldwide. For more information visit www.naihorizon.com or www.naiglobal.com.

Category: Press Release, Property Management | Comments (0)
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