Despite Headwinds, Phoenix Development Prospects Still Strong
Land costs are going up, construction labor is a little short and lenders are fretting about overbuilding. Will all that dampen commercial property development in a hot market like Phoenix? Probably not for a while.
Simon CRE president Joshua Simon said he is optimistic about the prospects for Phoenix commercial development moving forward.
"Our biggest concern for our infill development is the increase in land prices. They've gotten too high, but we feel like that will adjust in the near-term.
"Our clients continue to plan for growth in the next 12 to 24 months, despite some of the uncertainty in the market and some retailers closing shop. As a company, we're continuing to grow our client base, which we see as a positive sign."
Much of Simon CRE's recent work in metro Phoenix has been developing single-tenant and multi-tenant retail space, including projects for Bush's Chicken, Dollar General, Tuft & Needle and others.
EverWest Real Estate Partners managing partner Curt Kremer said he believes the Phoenix office market still has considerable strength.
"The market continues to show positive absorption year-over-year, and unlike other cycles we haven’t overdeveloped the product type yet."
Even so, office owners and managers should not be complacent.
"The state of the market doesn't mean that office product in every submarket of Phoenix is a good investment," he said. "Users are getting more selective than ever and demand is very location-driven."
EverWest holds properties nationwide. In Phoenix, its office portfolio includes the Madison in Phoenix, the Quad in Scottsdale, the Forum at Gilbert Ranch in Gilbert and the Circuit in Tempe.
Simon and Kremer are two of our speakers at the Phoenix New Construction & Development event May 16 at the Renaissance Phoenix Downtown.