A big “thank you” to the AZRE Forum experts today for a great event and the depth of knowledge shared and learned! We were thrilled to attend.
(Coverage Via AZ Big Media)
A sold-out crowd gathered Thursday at the AZRE Forum to hear experts from all aspects of commercial real estate shed light on the strengths, opportunities, and challenges facing Arizona’s commercial real estate sectors heading into 2020 and beyond.
“The only thing I don’t see going well in the future is Phoenix’s sports teams,” joked Mike Garlick, executive managing director and local market leader for Newmark Knight Frank. “When it comes to the economy, I don’t see a lot of clouds on the horizon and I think that’s going to be the case for many years to come.”
Garlick was a member of the brokerage panel, which included moderator Paul Komadina from CBRE, Laurel Lewis from NAI Horizon, Ryan Sarbinoff from Marcus & Millichap, Charles Steele from JLL, and Will Strong from Cushman & Wakefield.
“What is driving everything is that Phoenix has become a hot employment market,” Garlick said. “I have never seen a time like this with so many bigger requirements from clients. And the good thing is that most of it is not from homebuilding, which always drove the Phoenix market in the past.”
Cushman & Wakefield’s Strong echoed Garlick’s positive outlook and offered an example to show how hot the Phoenix market is right now.
“We recently worked on a deal and had 14 offers that were all record pricing,” Strong said. “It’s really cool to be an industrial guy now.”
The panelists pointed toward the work of the Greater Phoenix Economic Council, the Arizona Commerce Authority and Gov. Doug Ducey for creating the “open for business” climate in Arizona that is driving the commercial real estate sector.
“We are first in the nation in population growth and Top 5 in the nation in GDP and job growth,” said Sandra Watson, president and CEO of the Arizona Commerce Authority and moderator of the development panel at the AZRE Forum. “In the last fiscal year, the ACA closed 105 projects that created 24,000 jobs and brought in $2.6 billion in capital investment.”
The best thing about those 24,000 jobs? They came in at 186 percent on the median wage in Metro Phoenix.
“We are more economically diverse than at any point in our history,” said Ericka LeMaster, senior vice president and team manager for commercial real estate lending for Alliance Bank of Arizona. “Because of that diversification, I see our growth continuing in a smart, strategic way.”
LeMaster was joined on the development panel by Jackob Andersen of Saint Holdings, Brandon Dillingham of Hines, Derek Kirkland of DPR Construction, Alana Mann of The Statesman Group, and Jennifer Schrader of Caliber Development.
So what do the AZRE Forum panelists think is in store for commercial real estate moving forward? Here are their bold predictions:
Strong: “I think we are going to see a massive consolidation of institutional owners across the U.S.”
Sarbinoff: “We will see a Fortune 500 company move its headquarters to Metro Phoenix in the very near future.”
Lewis: “We can expect to see one of the major co-working companies go out of business.”
Garlick: “Since 1987, Phoenix has experienced a downturn in the office market at every six years. Since the last downturn, the office market started to rebound in 2015 but really did not get back on its feet until 2017. Given these facts and barring any geopolitical crisis or event, I don’t think we are going to see a significant downturn in the office sector until at least 2023 and maybe even until 2025.”
Andersen: “We will become a major automotive manufacturing hub for electric vehicles.”
Schrader: “We are going to see a dramatic increase in build-to-rent residential properties because there is a demand and a need.”
LeMaster: “The CBD environment will have a significant impact in Arizona, particularly on the manufacturing side.”
Dillingham: “In 12-18 months, Downtown Tempe will reach $50 per square foot for rent.”
Kirkland: “We will see more companies controlling the entire life cycle of projects.”
Mann: “In 24-36 months, we will solve the problem of affordable housing. Co-working spaces are trending. We will soon see co-housing. It’s doing well in the U.K. And we are going to see it here.”