PHOENIX—The local economy should expect continued slow to moderate growth—around 2% to 2.5%. That was the consensus among panelists at a recent RealShare conference here.
"The big thing we have to see more of is more residential and new home construction, which will help the multi-tenant industrial here." That is according to John DiVall, SVP and city manager of Arizona at Liberty Property Trust, who recently spoke at the RealShare Phoenix Metro conference.
When asked how jobs plays a role in the future of industrial here, panelist Patrick Gallagher, partner of the southwest region at Dermondy Properties, said that the move the region has, the better. "I think the cycle is in an upward swing."
Generally speaking, DiVall said, job growth is everything in the office market. But the industrial market, he said, is more dependent on trade. "What we would like to see here is certainly job growth, but also population growth."
But the industrial market is seeing a shift, said Will Strong, SVP of Cushman & Wakefield. "We are seeing a shift particularly in the Southwest part of Phoenix from build to suits to spec and spec to suit."
The other dimension, Gallagher said, is capital driven. "If you look at the Southwest part of the phoenix market, the recession really hit it hard and it took a long time to come back. It is truly tenant driven demand for new development."
He added that "there is the conventional industrial market driven by the economy, housing and all that, and then there is a separate entity—the ecommerce business and it is exploding." But just because it is exploding, he warned, it doesn't mean the small to medium buildings are healthy.
Switching gears a bit, moderator Mike Myrick, senior associate at Marcus & Millichap, asked about why there are so many build to suits when there are plenty of spaces available. "You are starting to see big multi-national companies that want exactly what they want and don't want to share the building with anyone else," said DiVall.
But the future for Phoenix industrial is bright said DiVall. "There are so many people looking for deals in L.A. and coastal markets. We are a high level secondary market."
He added that every decade since 1950, Phoenix has been in the top five in job and population growth. "That includes the last decade where we had the crash," he said. "And with the land we have here for good developers to keep developing and being as close as we are to L.A., I am very bullish as to where we are."
DiVall added that "If we think we aren't tied to national problems though, we are fooling ourselves. But we are in better shape than many other markets."
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
