With events like Super Bowl XLIX and the College Football Championship on the horizon, it’s a lucrative time for Phoenix hotel owners. Investors want to buy into the market, but there’s been little on the sales block, says Marcus & Millichap hotel guru James Meng. This imbalance means that those who do sell will see aggressive prices, he says, but it’s been challenging to convince clients to sell their hotels at a reasonable price. What’s particularly attractive: the quick burst of money hotels will see during the Super Bowl, so some owners are planning to hold until then. (It must be an exciting time for James, who’s not only a sports junkie but has hotels in his blood: His father owned four Holiday Inns and James previously spent 15 years at Hilton.)
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One source of investment interest is the EB-5 program, which requires foreign investors to create and retain 10 jobs. “That’s much easier to do in hotel than office,” says James’ colleague, regional manager Don Morrow. And as California properties across all sectors appreciate, that demand is spilling over into Phoenix. (One recent single-tenant retail deal the office completed garnered two all-cash offers well above the asking price.) Don says that 48% of all sales Marcus & Millichap’s local office completed last year were with California buyers, and 42% of those were exchange buyers, selling buildings they owned in California for a 1031 deal in Phoenix.
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