Examining the housing and economic development in Phoenix
Phoenix has seen significant development in its housing and economic development this year and migration patterns that point to its various advantages such as job availability, business-friendly setting, and sunny weather. Here is an overview of the region’s different expansion and development trends that have been recorded recently.
Home prices and rent continue to increase
According to AZ Big Media, the latest results for the S&P CoreLogic Case-Shiller Indices were released by the S&P Dow Jones Indices (S&P DJI) recently. Data released for June 2022 reveals that home prices are still rising across the country. It was shown that Phoenix is at #4 in the United States for the year-over-year home price increase, with a 26.6 % spike in home prices.
According to another AZ Big Media report on September 23, it was revealed that Metro Phoenix ranks #2 among large communities for a 10-year increase in home costs. The rise in home prices is a result of more people, primarily Millenials choosing to relocate there from other states.
As it relates to rent increase, Kate Tracy and Jeff Gifford of the Phoenix Business Journal say the Phoenix metro’s median rent increased by 45.6% last year. This placed it at number 38 in the list of the most expensive cities in the country. Tucson’s had the highest rent growth rate in the US for the past year. According to a new report from the rental listing company, Dwellsy, Tucson’s rent prices went up by 124%, reaching an average of $1,980 in August. This was $1,096 more than the previous year.
A LOOK INTO THE MIGRATION PATTERNS IN ARIZONA
According to AZ Big Media, a recent 2022 study by SmartAsset shows the states where wealthy persons below 35 are moving, and Arizona is among the top ten states where they are heading.
The study reveals that affluent young professionals are leaving California following several years of even migration patterns. The study also shows New York as the primary state losing young rich professionals.
According to David Purtell of the Phoenix Business Journal, the data from Smartasset about the migration patterns of wealthy millennials highlights the impact of remote work on the economy. We see where young people can live and work where they choose and look for cheaper locals compared to cities like Miami, Los Angeles, New York City, and Chicago.
Another Phoenix Business Journal article by Andy Blye says that most newcomers to Arizona are equipped with the funds to spend, which significantly impacts home prices. The majority of the newcomers to Maricopa County between 2019 and 2020 were from California. Outside of California, most newcomers to the county came from Nevada, Washington, Utah, and Cook County, Illinois. IRS data shows that newcomers to the county from places like California, Chicago, and Seattle brought average incomes of $79,000 or higher, which is more than Maricopa County’s 2020 median household income of nearly $72,000.
In 2020, Pinal County saw its biggest groups of newcomers from California, Seattle, and Chicago. The median household income of Pinal County was $67,000 in 2020, while people from Chicago came with average incomes of $88,000 and from Seattle, $94,000.
An AZ Big Media article shows that about 64,000 Californians have moved to Arizona annually during 2016-2020. Net migration has been the primary source of Arizona’s population.
The US Census Bureau’s American Community Survey five-year estimates for (2016-2020) reveal that Arizona pulled migrants from every state in the nation. Most migrants came from California more than any other state.
Evidence shows that Phoenix is a well-loved city. According to AZ Big Media, a Home Bay research shows that Arizona has been voted the seventh-most desirable state. But as it relates to Phoenix, the results are different as the Home Bay’s survey of 1,000 Americans saw Phoenix being ranked as the sixth most desirable city in America.
More jobs to come for Arizona
According to Ron Davis of the Phoenix Business Journal, Charlotte, North Carolina-based company Townsquare Interactive will move into an 11,875 square feet at Two Renaissance Square in February 2023. It plans to double its staff which is currently at 30, by the end of the year. Then moving forward, it intends to employ “hundreds” at its office that will be on the fourth floor at 40 N. Central Ave.
According to AZ Commerce, Arizona’s economic development efforts broke records for the second year in a row. In the one-year fiscal period, which ended at the end of June 2022, the local economic development agencies and the Arizona Commerce Authority (ACA) collaborated with companies dedicated to creating a projected 24,186 new Arizona jobs – a single-year record. These companies were also committed to investing $10.75 billion in local communities.
Meanwhile, Ron Davis of the Phoenix Business Journal reports that Boeing Company completed the construction of a new addition to its campus in Mesa.
Based in Virginia, the company shared that the construction was finished on its advanced composite fabrication center. It will be home to production materials for combat aircraft in the future. The company says it will hire 150 employees to work at the fabrication center located on Boeing’s Mesa campus at 5000 E McDowell Road.
Recent industrial expansion in Arizona
Ron Davis of the Phoenix Business Journal says a pair of large industrial projects may add 5 million square feet or more of industrial development to Gilbert. Creation Equity, based in Phoenix, is proposing Lindsay 202, which is a 1.4 million-square-foot industrial project on Lindsay and Germann roads located off Loop 202.
The Las Vegas-based IndiCap and partner Salt Lake City-based Colmena Group are proposing The Ranch. This project is a 4.1 million-square-foot mixed-use project on more than 300 acres, located mainly on the southwest corner of Elliot and Power roads.
A report by Brandon Brown of the Phoenix Business Journal says Mr. Pickles, the sandwich chain that relocated its headquarters to Scottsdale from Northern California at the beginning of 2022, has signed a deal that will expand the company even more. The company signed a franchise agreement with California- based Hungry Hospitality to open up to 20 new restaurants.
Audrey Jensen of the Phoenix Business Journal says new distribution and manufacturing facilities are planned for El Mirage. The article says two industrial projects were suggested for El Mirage. The area has seen continued industrial development in addition to the rest of the West Valley. The first project has a 216,820-square-foot distribution warehouse to be developed near the northeast corner of El Mirage Road and Olive Avenue. Then west of the proposed warehouse, Desert Truss West, a 52,780-square-foot truss manufacturing facility is being suggested.
A large East Valley industrial project begins construction and will bring new restaurants to Tempe. According to the Phoenix Business Journal, Contour, a real estate development company based in California, began the construction of a 1,5 million-square-foot industrial park in Mesa. The group recently closed on a loan.
The initial site plan for the $150 million phase one comprises a combination of five warehouses, industrial and distribution buildings set for completion in the second half of 2023. Phase two of the development calls for three more buildings to expand across 722,000 square feet.
A California firm received 270 acres to build an industrial park near the Mesa airport. Ron Davis of the Phoenix Business Journal says less than twelve months after launching into the Phoenix metro, Shopoff Realty Investments has plans for another big East Valley project. The company based in California has 269.6 acres near the Phoenix-Mesa Gateway Airport.
The location for the proposed business was formerly a dairy farm. The development could include 12 buildings with up to 4.1 million leasable square feet. Additionally, it will have an average building of 500,000 square feet which will be utilized for manufacturing purposes.
Tech developments taking place in Arizona
Phoenix is at the top of Data Center Markets in New Demand. According to Jack Rogers of the GlobeSt, Phoenix is currently at the top of the US data center market, measured in megawatts of net absorption, based on the latest Data Center Outlook report from JLL. The US market demand reached 1,087 MW in H1 2022, over 95% of the total demand the year before.
JLL credited the surge to the taking on of hybrid work patterns and the continuing explosion of streaming apps plus conventionally high pre-leasing activity.
Operators are looking for markets with high availability of land and power. Greater Phoenix is benefitting from this trend and topped the leaderboard in H1 2022 demand with MW of absorption. This is ten times more than the total absorption in the Phoenix market for 2021.
Also, according to AZ Commerce, Corning Incorporated, a leading innovator in materials science, says it will expand its optical cable manufacturing capacity. This is based on a long-term relationship with AT&T. Corning will construct a new cable manufacturing facility in Gilbert, which will create 250 vacancies. It is expected to start in 2024 and will be the industry’s westernmost US manufacturing site for optical cable.
Rise48 Equity has completed $1,725,751,000 in total transactions since 2019. We currently have $1,285,186,000 of Assets Under Management, all in the Phoenix MSA.