EXEC-DESK: PHOENIX MARKET UPDATES FROM RISE48 EQUITY CEO

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Phoenix MSA Updates - November 2021

There are different factors affecting real estate in Phoenix, including investor activity, job availability, and educational opportunities.

Rise48 Equity Completes a Multimillion-Dollar Transaction in 10 Days

AZ Big Media reported that Rise48 Equity has completed three transactions in 10 days. The transactions, which include two dispositions and one acquisition, were valued at a total of $109,850,000. The company will be selling its fourth deal this month, and the two recent dispositions caused them to outdo investor return projection in less than the forecasted period. They are looking for more opportunities to invest.

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Rise48 Equity acquired Villa Serena Apartments, a 137-unit community in Phoenix, in August of 2019. It recently acquired Marble Creek Apartments, a 244-unit property that will be the first property to be managed by their new property management company, Rise48 Communities.

Rise48 Communities has been Created to Manage Rise48 Equity’s Properties

Angela Gonzales of Phoenix Business Journal explains that Rise48 Equity has created a property management company to oversee all its communities. Rise48 Equity is looking to close on $550 million in apartments in metro Phoenix in 2021.

The new property management company will be called Rise48 Communities. It will assume the management of a 244-unit apartment community, Marble Creek Apartments, which is currently being rebranded as “Rise Skyview”. By the close of 2021, Rise48 Communities will control 3,000+ units of the 18 assets in metro Phoenix.

Rise48 Communities plans to give their employees better wages and benefits, hire 50+ more people, and hopefully take that number to around 80 by the end of the year.

The Sectors in Arizona that Will Continue to Grow in 2022

In an AZ Big Media article, Don Garner says Arizona, one of the top five fastest-growing states in the US, will continue to see much growth in various areas of its economy in 2022. One of these areas includes Commercial Real Estate, where many businesses, primarily those in the industrial sector, are moving to Arizona. This will provide high-paying jobs and will increase the demand for housing.

Another sector that will grow in 2022 is the retail and eCommerce sector. Some developers have been trying to keep up with the new trends in shopping and so have transitioned properties into a mixed-use format where they can access retail, grocery, restaurants, offices, and multifamily properties within a redevelopment. The manufacturing industry is also expected to expand, which will help make 2022 an excellent year for the state.

Biotech and Life Sciences Industry Increasing in Phoenix

According to Philip Wurth’s article in the Commercial Executive Magazine, Phoenix can expect more BioTech and Life Sciences opportunities. This is because there are now several facilities in the region to facilitate biotech companies.

Translational Genomics Research Institute (TGen) has been helping to develop the scientific and medical research community in Phoenix.

Since their involvement in the area, Arizona State University expanded its downtown campus in Phoenix, and the Creighton medical school moved to the region. With these educational institutions, Phoenix will be better prepared to provide quality labor to these scientific industries.

There are also facilities such as Wexford’s 850 PBC building with 227,000 square feet of space on the Phoenix Biomedical campus. This, along with Idea Building in Tempe and Illum building in Scottsdale, offers R&D Space to BioTech and life science companies which Phoenix previously lacked. Phoenix is prepared to accommodate tech and biotech companies by providing the proper infrastructure and real estate support.

Gulfstream Aerospace Corp Moves to Mesa

Brandon Brown of Phoenix Business Journal has announced that major private jet manufacturers, Gulfstream Aerospace Corp., will build its West Coast maintenance, repair, and overhaul facility in Mesa. They will be investing $70 million in the facility at the Phoenix-Mesa Gateway Airport.

The facilities will have maintenance hangers, offices, and space for customers. Gulfstream customers will be able to fly there and have their planes serviced or fixed.

The facility is expected to be completed in 2023, and job openings will be posted soon. They are looking to hire a maximum of 75 employees, for now. About two hundred workers will be hired once the new facility is built. Maintenance work will commence at a minor level in an existing hanger.

Gulfstream will encourage economic development and will also bring global attention to the area.

How Arizona is Recovering from the Pandemic

George Hammond of AZ Big Media explains that Arizona has a fast recovery rate from the Covid-19 pandemic. The areas which are improving include the housing market and job availability. The state has helped people regain their jobs lost in the earlier pandemic stage, and it is expected that the peak in the job market state could be reattained by April 2022.

In the next 30 years, Arizona will see increased leisure and hospitality, education, and health professional jobs.

Redfin Finds Evidence of Increased Homebuying

In an AZ Big Media article, it was revealed that Redfin, a digital real estate broker, has found evidence of an increase in homebuying at a time when many people would not be buying homes. The Redfin’s Homebuyer Demand Index measures requests for home tours and other services related to home buying, which is adjusted seasonally. This index has been at its highest since around 2017.

Some of the evidence of home buying include that new listings of homes were down, pending sales of homes were up, and homes under contract had accepted the offer within a week of hitting the market. Other evidence of an increase in homebuying includes the fact that applications for mortgage purchases increased, and Redfin Homebuyer Demand Index rose 6.7 points at the ending of November 14 to the highest ever since they began recording the data.

Some Cities are Seeing High Investor Activity in Real Estate

Investors are putting a lot into real estate across the country. Ashley Fahey of the Phoenix Business Journal says there has been an analysis of the relevant data to determine the number of homes investors bought in the third quarter. Investors bought over 90,000 homes and made up 18.2% of the overall housing sales in Q3.

However, the data collected does not include Dallas and Austin in Texas, two major metro areas. The Sunbelt metros were the top areas for investors. These regions are also very popular for migration as they have relatively more affordable homes than other areas in the US. They continue to attract a mixture of homeowners, renters, and investors.

Many investors are interested in apartments in the Sunbelt area because there has been unprecedented rent growth after significant declines during the start of the Covid-19 pandemic. It is expected that growth in the market in the region will continue despite the pandemic. There are fewer investments in assets such as hotels, so more attention is given to multifamily investment.

The Business Journals ranked 30 areas with the highest number of investor home purchases in the third quarter. Some of these areas saw investors more than double in the last year. This trend will continue as rentals are on the rise.

Top Five Real Estate Markets in Arizona

According to Michael Hills of AZ Big Media, Arizona is expected to see an 8.2% appreciation in house costs at the start of 2021 until September, making it one of the United States’ hottest real estate markets.

Phoenix has been ranked as the number one in the Arizona real estate market. It is also one of the top real estate markets in the US. Phoenix has a great economy, excellent entertainment, and nightlife spots, and the weather is often a plus for persons looking for a new home. It also has affordable housing options.

Next on the list is Scottsdale, where there is much growth happening in its real estate market due to the incredible educational and employment opportunities and the success of its tourism sector. This has attracted many families and professionals.

Tucson is the third most successful real estate market in Arizona, especially the town of Corona de Tucson that has a low crime rate and proximity to schools. This area is excellent for long-term rentals as the home value prices are high.

Next on the list is Tempe, which has seen an increase of 3.3% in its job market. While Prescott, one of the smaller towns on the list, is seeing a growth in homeownership as most residents are young families looking to settle.

Tempe is One of the Boomtowns in the US

Corina Vaneck of the Phoenix Business Journal says Tempe is one of the top boomtowns in the US. This is based on a study by SmartAsset, which ranked the cities based on population change, unemployment rate, and GDP.

Tempe came in seventh in the nation based on changes over the last five years. The study listed the US’s top 50 “boomtowns” and included Mesa in the 42nd position. Murfreesboro, Tennessee, came in first place in the study, followed by Nampa, Idaho.

The Tempe Streetcar, which will create significant economic development growth in Tempe, will open in April. Tempe is also involved in subleasing office spaces. While Tempe has the issue of a lack of affordable housing, steps are being taken to remedy this issue, such as having funding streams for affordable housing.