This is how experts see the prospects for commercial real estate in Arizona



Real estate in Arizona is booming. But how long can this go on? AZRE reached out to experts directly for their views on the prospects for commercial real estate in Arizona.

On August 5, commercial real estate professionals (CREs) gathered at The Clayton House in Scottsdale to hear the views of industry experts at AZRE’s 7th Annual Forum. Experts provided an in-depth analysis of the industrial, office, retail and multi-family sectors; discussed the consequences of COVID-19; and predict what may happen in the market in the future.

READ ALSO: How can Arizona cope with the increased demand for construction labor?

“Our panellists are some of the most informed and experienced people in their fields. Their joint discussion of the prospects for commercial real estate gives us an understanding that is not found anywhere else, ”says Michael Gossi, editor-in-chief of AZ Big Media, who presented the event.

The AZRE Forum panel was sponsored by NAI Horizon, McQueen and Gottlieb, and Growth48 Shares… The drinks sponsor for the AZRE Forum was Enterprise Bank & Trust and the sponsor of the dessert was Tempe town… The audio sponsor was Phoenix Technology Audio Visual

Here are a commercial real estate perspective and some key takeaways from the three panels.


The event was opened by the brokers panel, which provided up-to-date information on the current state of CRE in Big Phoenix. The status quo indicates a positive trend for manufactured goods in the state.


Bob Mulhern, Colliers – Moderator

Boston Chautani, Taylor Street Advisors

Cliff David, Markus and Millicap / IPA

Laurel Lewis, NAI Horizon

Tony Lydon, JLL

Rob Martensen, Colliers

“We are fortunate to be living in Arizona, where there is reasonable regulation and taxation. For this reason, we are one of the few states that actually make products, ”comments Tony Lydon, managing director of JLL, referring to the influx of manufacturing companies based in Arizona.

(Photo by Bruce Andersen, AZ Big Media)

West of the Colorado River, the Inner Empire region of Southern California is known as an industrial center. Goods shipped from Asia land at ports in California. However, the Big Phoenix’s proximity to the Inner Empire makes it an attractive option for distributors.

“Inland Empire will always be king because Southern California is home to 20 million people,” says Rob Martnesen, executive vice president of Colliers. “But now, instead of just having a giant building in the Inner Empire and then distributing products from there, companies are starting to say, ‘Maybe we just leave what we can in the Inner Empire and put the rest in Phoenix.”

Talking about market resilience, Cliff David, Managing Director of Marcus & Millichap’s Property Advisors, notes: “At the end of June, sales were about $ 5.3 billion. It is reasonable to say that by the end of the year we will earn between $ 11 billion and $ 12 billion. “

Even before the effects of the pandemic intensified, some predicted the death of retailers due to the convenience and ubiquity of Amazon. But Boston Chautani, vice president of Taylor Street Advisors, is not hearing the death bell at retail. “To a certain extent, some parts of the market will die and change. Big box stores will shrink, ”he says. “A lot of the headlines focus on the deteriorating condition of shopping malls, but small multi-user malls are doing very well.”

COVID-19 Impact Panel. (Photo by Mike Mertes, AZ Big Media)


Like any industry, the COVID-19 pandemic has had a profound impact on CRE. The hospitality sector has been hit particularly hard by orders for housekeepers and, after businesses reopened, wary consumers. Some planned projects have been postponed due to the uncertainty caused by the crisis.


Patrick McQueen, McQueen and Gottlieb – Moderator

Ben Darwin, CliftonLarsonAllen

Andrew Geyer, Layton Construction

Derek Flottum, Irgens

Kimberly Rollins, Commercial Properties, Inc./CORFAC International

(Photo by Bruce Andersen, AZ Big Media)

However, people have found a way to continue the business. “Smaller tenants didn’t seem to go to the office in the shortest amount of time. But our large public tenants have yet to return, ”says Derek Flottum, vice president of development at Irgens.

Looking at the multi-family sector, Kimberly Rollins, senior vice president at CPI, notes that the current conditions are very different from those of 2008. “We thought we were heading for another 2008-style recession, but that didn’t happen,” she says. “In fact, the opposite happened. This time, the big difference is that people have money and they don’t have excessive debt capital. “

Speaking to the construction industry, Andrew Geyer, executive vice president of Layton Construction, said the business was booming during the pandemic. However, material costs have skyrocketed. “When COVID was gaining momentum, factories fell into disrepair because they believed that demand was going away. As a result, prices for all materials increased, as did waiting times. It used to take 10 to 12 weeks to make steel beams. Now it takes 10 to 12 months. “

Industry forecast panel. (Photo by Mike Mertes, AZ Big Media)


Overall, the panellists believe that Big Phoenix is ​​set for a brighter future due to its favorable business environment, well-built infrastructure and the fact that it is the location of organ transplants throughout the country.


Suzanne Kinney, NAIOP – Moderator

Jamie Godwin, Stevens-Lineweber

Ben Gottlieb, McQueen and Gottlieb

John Keenzer, Enterprise Bank

Kristen Stevenson, GPEC

But there are problems on the horizon due to a shortage of labor in construction. Without enough workers on the construction site, deadlines start to stretch, increasing costs.

However, organizations such as the Greater Phoenix Economic Council (GPEC) are working hard to ensure that investment flows into the state. “GPEC has had great success in the past fiscal year, creating 10,000 jobs in the valley. There has been a shift in what is to come. It used to be half industrial, half office, but now almost two thirds of it is in manufacturing, ”said Kristen Stephenson, senior vice president of research and analytics at GPEC.

Looking ahead, Jamie Godwin, owner and president of Stevens-Leinweber Construction, adds: “We’ve been extremely busy with speculative office suites and small spaces for the past 12 months, and larger deals are starting to come back to the market. market. I think by the end of next year we will be back to the same level of activity that we were at before the pandemic. “

Concluding the event, Stevenson predicts: “The Big Phoenix will become the center of semiconductor and electronics manufacturing in the country, if not the entire world.”

7th Annual AZRE Forum. (Photo by Bruce Andersen, AZ Big Media)


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