"It's the small investor whose moving the market right now, especially with 1031 Exchanges," Trammell Crow Co.'s Barry Gabel tells GlobeSt.com. The Phoenix-based executive said smaller investors are so hot to take advantage of today's low lending rates that properties are often snapped up long before they hit the market.
Yet even with that growing demand, many owners remain hesitant about putting their property up for bid out of fear they may not be able to find a suitable replacement to satisfy 1031 Exchange requirements, he noted.
"If you can convince a seller to sell, typically you're going to have to provide them some opportunities to trade into something else," Gabel said. "The problem is there's not a lot of product on the market." That has led to a pent-up market demand which, in some cases, has caused buyers to overpay for certain properties.
Because many small firms are finding it cheaper to buy rather than lease office space, the pent-up demand for class B office space has become so great, that much of it in the area is now selling at a premium. Class A office space also is hot with institutional investors, primarily in prime areas such as Scottsdale and the Camelback Corridor, Gabel said.
But while many smaller investors are jockeying to take a position in the market, others are laying back and waiting for even better deals. They may be disappointed, Gabel said."There are still a lot of buyers waiting for the blood to trickle out in the street, but we haven't seen that here in Phoenix," he said. "We haven't seen the repos." Even in tough economic times, he said, the state's real estate market is still thriving.
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