AN ANALYSIS OF THE TRENDS AND PREDICTIONS FOR THE PHOENIX REAL ESTATE MARKET
2022 is still quite young, but the patterns and predictions already show the state of Phoenix’s real estate market for the year. There are several major investment plans in place for Phoenix. Various factors such as job availability and affordability will continue to attract persons from across the US to the area.
XNRGY’s $300M investment will bring 900 jobs to Metro Phoenix
According to AZ Big Media, XNRGY will be constructing a new manufacturing facility in the Greater Phoenix area to serve as their headquarters. XNRGY is one of the biggest custom air handling makers in North America.
XNRGY is experiencing exponential growth because there is a strong demand for the climate technologies they create. The facility will be one million square feet. This $300 million investment will lead to 900 jobs being available for residents. The new facility in Arizona will cause the XNRGY manufacturing facility to increase to 1,250,000 square feet, including a 250,000-square-foot facility in Montreal.
Gensler, a global architectural firm, will design the state-of-the-art facility, and construction will start in June of 2022, and the first phase is expected to be complete in Q1 of 2023.
Influx of people moving to Arizona
Brandon Shear and Matthew Wallace of AZ Big Media report that before Covid-19, many people moved to cities across the US due to the continuous advancements in technology and consolidation of wealth in the cities. Some were also attracted by the idea that the cities could provide them with more affordable living.
As a result of Covid-19, affordable suburban life became more popular because of more spread-out communities and people now rely less on public transportation.
In the early stages of the pandemic, out-migration was popular, where people left dense urban areas for suburban areas. This was possible because people were no longer bound to their physical work locations.
Currently, people are moving into entirely new states, especially the Sunbelt region. They are leaving behind expensive coastal cities for more work-friendly cities in the Sunbelt. Big companies are also doing the same and moving their headquarters to places like Dallas, Houston, Nashville, and Phoenix.
Most of those moving are in their mid-30s, single, childless, working remotely with above-average incomes who are moving temporarily and are primarily renters and not first-time home buyers. Plus, millennials seeking to purchase homes for their families are also moving to the Sunbelt.
Many persons are leaving the West Coast for Arizona, and this is a pattern that has become more popular since the pandemic. Phoenix sees 200 new residents per day as people seek more affordable units.
Apartment demand beats the previous record high
Paul Bergeron of GlobeSt.com has shared that for most market-rate renters, apartments are still affordable. RealPage reports that Renters that fall into these categories are moving and carrying their massive incomes as well.
Last year, the demand for market-rate apartments went far beyond the highest recorded in the thirty years RealPage has been monitoring the market. The net demand equaled over 673,000 units, wiping out the previous high that was set in 2000 at 66%.
It is believed that the demand would have been higher if there wasn’t a record-low vacancy which significantly affected how many units were available for rent. The strong demand led to an increase in apartment occupancy of 2.1 basis points for year-over-year to 97.5%.
The increase and the resulting rate are the highest recorded since the tracking of apartments by RealPage in the early 1990s.
Kohler Co. will construct a manufacturing facility in Casa Grande
The Arizona Commerce Authority reports that American manufacturing company, Kohler Co., will construct a Greenfield Plumbing ware manufacturing facility, office space and an ancillary warehouse in Casa Grande on 216 acres.
It is a multi-million capital investment that has about one million square feet. Additionally, there will be room available for expansion in the future. It is expected that the project will open 400 new full-time employment positions in the area.
To support rising customer demand, Kohler will make the company’s popular line of bath and shower fixtures.
The facility will become operational in August 2023 and will feature smart factory elements and include sustainability measures to minimize greenhouse gases plus water and solid waste. They are also exploring the use of alternative energy.
The new manufacturing operations will cause the local economy to expand, where tax revenue will increase, and more jobs will be created.
Phoenix home values reach 30.7% over the last year
According to AZ Big Media, Zillow’s most recent monthly report shows a record-breaking low inventory and unparalleled price growth. This includes Phoenix, which saw home values going up to 30.7% over the past 12 months.
In the Phoenix Metro, the home values are $434,184, up by 30.7% since last year and up 1.3% since last December. While the typical rents are $1,864, 25.6% higher than the previous year and up 0.3% since last December.
Plus, in the Phoenix Metro, the available inventory is down by 8.3% since last December and 22.1% below that of January 2020. The new inventory went down by 4% since the previous year and down by 11.6% since last December.
Phoenix falls among the top growth market for office leasing by tech companies
Corina Vanek of the Phoenix Business Journal says that 2010 to 2020 saw Phoenix being one of the key markets for annual growth in leasing by tech-related companies, a 27% annual average growth.
This made Phoenix the second area in the US for increased office leasing by companies in tech. It is behind Raleigh-Durham, North Carolina that saw a 33% annual average, as shown by data from JLL. However, the area was below the national average growth for the number of employees in tech. It grew by only 3% in 2021, according to data from JLL.
Prior to the pandemic, the economic development advocates for the Phoenix area applauded the rise of tech-related businesses in the metro. Since the pandemic, technology-related companies have occupied space at some of the most visible office buildings in the Valley.
A 112-acre development site near Mesa Gateway has been sold for $36.7M
AZ Big Media reports that SVN Desert Commercial Advisors has finished the sale of an industrial site in Mesa. The area, approximately 112-acres, is situated at the southwest corner of Warner Rd and Sossaman Rd, just north of the Mesa Gateway Airport. Contour Real Estate acquired the property from Structures Investment LLC. Contour is an entity controlled by a California-based real estate and investment firm. They plan to construct a master-planned industrial park comprising eight buildings targeting manufacturing, e-commerce tenants, and logistics. The Mesa project is the most extensive of Contour’s three industrial projects underway in the Arizona market.
METRO PHOENIX HAS BEEN PLACED NO. 4 AMONG THE MOST ACTIVE US REAL ESTATE MARKETS
AZ Big Media reports that StorageCafe research shows that the Phoenix metro area has done great for new construction over the past decade and has outdone more extensive urban areas. The article explored real estate development in the US’s top
50 largest metros over the past ten years for both the commercial and residential sectors.
While the decade began slowly for new construction due to the setbacks caused by the previous recession, the second half of the decade witnessed an enormous boost in real estate development. This trend was also evident in the Phoenix-Mesa-Chandler metro area.
While Phoenix has a smaller population than most of the metros ranked in the top ten, it managed to be placed fourth for new construction. Industrial construction also got more popular over the last decade, where over 97 million square feet of new industrial space was added. This is 17 million square feet more than what was built by the New York metro area in the same period.
Rise48 Equity has completed $817,116,000 in total transactions since 2019, and currently has $659,516,000 of Assets Under Management, all in the Phoenix MSA.
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