PHOENIX—More than 200 attended the RealShare Phoenix Metro conference last week at the Phoenician in Scottsdale. Jim Mahoney, senior managing director, Trammell Crow Company, moderated the panel, Development: East Valley, West Valley, and Beyond. Panelists included Mark Singerman, vice president and regional director for Arizona, Rockefeller Group Development Corporation; Molly Carson, vice president of development, RYAN Companies; Fred Stiles, regional director, EJM Development; and Orion Alcalay, executive vice president of due diligence services, AEI Consultants.
Stiles said he had seen more industrial activity in the last few months than in the past six years. “Activity is good. We've increased asking rents once if not twice. We're not approaching the rents we had in 2007, but we'll get there.”
“We haven't oversupplied the market,” Singerman said of the office sector. “Phoenix is a boom or bust market. The fact that the recovery is muted is healthy. The majority of vacancy is noncontiguous. The number of large projects in the pipeline is relatively small. I'm hoping that in 2015, small to medium sized businesses will get off the fence and take some of those noncontiguous spaces. There has been a sense of uncertainty about Congress that has held back those small to medium sized businesses. We hit tons of singles and doubles in this market. Occasionally we hit a home run; but you win the ball game on singles and doubles.”
Carson sees an increase in build to suits in 2015. “This is going to happen when a company is seeing zero of what they need to grow,” said Carson. “Companies are asking what they need to do to attain and retain quality employees. Where can I grow? Where can my employees grow and be the best in? Companies are making conscious decisions to locate here. We need to create our market. Marina Heights and Go Daddy could not find existing product to meet their needs. Build to suit helps to create a sense of pride for the company; they get to put their stamp on the project.”
Alcalay spoke of California's redevelopment in urban areas. “In southern California we've seen some bulldozing and building of mixed-use with subterranean parking and the need for urban development where it's not legal. On the east coast, we've seen demolition of coal and power plants opening space and making available some prime real estate. But these are places with strict environmental requirements. Phoenix has it pretty lax as far as environmental requirements; what you have to do to get a property entitled here is nothing compared to what it takes in California.”
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