Positive movement continues in the Phoenix multifamily market; investor transactions are on the rise, average rental rates have increased, and developers are continuing to invest in the market. With the market stabilizing after the recession, vacancies have continued to remain low and construction is increasing.
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Vacancy rates continue to decline locally in the Phoenix Metro area and on a national level. The average vacancy rate for retail property in the US fell to its lowest level in more than three years to 10.5%. The local retail market followed suit; the overall vacancy rate in Metropolitan Phoenix fell to 10.9%, the lowest it has been since early 2009. Retail sales in the U.S. are also headed in the right direction, up 0.5% and 0.4% in May and June, and up 5.7% over the last 12 months. While some areas still continue to struggle, overall the improvements in retail spending continue to boost the
CRE sector. As housing and employment also continue to rebound in the Phoenix area, positive momentum should carry the market back to where it was before the recession hit.
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The local industrial market has served as a model of what recovery can look like, even in hard hit metropolitans like Phoenix whose housing market was crushed. Over the past several years, this sector has regained momentum posting positive absorption consistently for the past 3 years while vacancy has declined steadily from the high of 17% seen at the beginning of 2010. Tremendous strides have been made in the industrial market, but not without minor hiccups. This quarter, leasing activity fell to levels seen at the beginning of 2009, and the steady decline in vacancy rates stalled due to a large amount of vacant delivered space. Even with the slowing of pace so far this year, the sector can be expected to improve in the second half of the year as the local economy continues to ramp up.
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