As Phoenix commercial real estate professionals, we are always analyzing the market so we can best serve our clients. As we project the outlook for 2016, we are anticipating steady growth in the coming year. According to the Phoenix Business Journal, the Phoenix office market ended 2015 with less than a 20 percent vacancy rate, which is the lowest level in years. There are a number of other positive indicators in several Phoenix commercial real estate sectors.
- Most indicators show that the Phoenix area will have good activity in the bioscience and medical sectors in 2016. Several construction projects in the medical arena are likely to stimulate economic growth, including the building activity at Phoenix Children’s Hospital and in the biomedical corridor.
- Overall, the industrial market has been in a maintenance phase and that should continue in 2016.
- The multi-family sector of Phoenix commercial real estate is seeing the lowest vacancy rates since 1999. This will undoubtedly be the most active sector in Arizona.
- The office market’s 20 percent vacancy rate is very positive, although it’s important to note that there are variations with some parts of the city short of space and others not experiencing the same level of activity.
- Phoenix has seen a four percent per year population growth rate for decades, and that has created an ongoing demand for retail space. The retail sector is expected to remain strong in 2016.
All this good news isn’t going to result in rapid expansion in the Phoenix commercial real estate market. But, we are expecting that there will be slow progress throughout 2016.
The Federal Reserve’s move to increase the federal funds rate signals greater confidence in the potential for economic growth. And, Phoenix is active in terms of economic growth. For example, efforts are underway to attract tech companies to Phoenix. Phoenix offers an educated workforce, a low tax burden and an outstanding climate.
If you are looking into the Phoenix commercial real estate market, let the Menlo Group put our expertise to work for you. We’ll work together to ensure that you find the right real estate to support your current and future business needs.