Vacancy Drop Pushes Rental Rates Up

Leroy and Tyson Breinholt are partners at Commercial Properties Inc./CORFAC International.

TEMPE, AZ—Commercial Properties Inc. is a CORFAC International affiliate and full-service brokerage and property management firm for all product types. The company offers a snapshot into market conditions in this review of the industrial and retail segment, along with some insight into the company’s partners, Leroy and Tyson Breinholt , in an exclusive . Looking at the Phoenix industrial market, senior vice president of industrial sales and leasing at Commercial Properties Inc., Eric Jones , tells GlobeSt.com: “The vacancy rates in the industrial sector have dropped dramatically along with a strong positive absorption, which is responsible for pushing rental rates up 30%. Landlord rent concessions have diminished and tenants are generally signing on for longer leases. Notwithstanding, rental rates are still very affordable and good value for tenants. With improved occupancy and stabilized rents, it is a good time for building owners to sell due to investors’ strong appetite for industrial properties. Owner-occupied properties have experienced the strongest increase in property value. High demand and a diminishing  supply are starting to bring back design-build projects. There are very few fully improved industrial lots available to build on and we are seeing a few speculative multitenant projects being built. ” Senior vice president of industrial sales and leasing Craig Trbovich touched on current activity in Northwest Phoenix, telling GlobeSt.com: “2016 is a year of continued expansion with lease rates rising and new development coming out of the ground. Deer Valley’s industrial vacancy rate is at 8.2%, compared to valley-wide vacancy of 10.5%. Over the past two years, 27 industrial buildings have been completed, adding 960,000 square feet of new space to the Deer Valley inventory.” Senior vice president Bob Deininger SIOR tells GlobeSt.com: “More businesses are purchasing buildings.  However, the size of the properties and the price per square foot are increasing. Until now, the institutional developers have been building spec industrial projects and buildings. With vacancy dropping well into single digits, the next step is the private investor /developers will enter the market and will begin building to meet the increase in demand.” Senior vice president Tom Semancik covers the Phoenix retail investment market. He tells GlobeSt.com:  ”The greater Phoenix retail investment market is experiencing higher prices in the second quarter of 2016 as vacancy drops, and B and C properties finally fill up after the great recession. Overall, capitalization rates raised just slightly reflecting the sale of these B and C properties to late comers to the marketplace. This trend is coupled with a divergent trend toward quality where at the top, investors are aggressively paying for retail properties that meet all the right criteria for location, age and tenant mix. Many of these buyers are coming from California and the Pacific Northwest, where prices have skyrocketed, making Phoenix prices more affordable looking.  A final influence in the current retail market is the re-emergence of investors completing IRS Section 1031 exchanges which had diminished greatly in the downturn.” At the helm of Commercial Properties Inc. are brothers, Leroy and Tyson Breinholt. They entered the commercial real estate industry as kids playing with life-size tractors and bricks through their father’s business, Breinholt Construction . “We really learned our work ethic from Dad. He would work long hours, but he loved what he was doing. Those are valuable lessons for life he shared with us. Have a direction. Have a plan. Find your passion,” says Tyson Breinholt, recalling summers working on the buildings his father was contracted to demolish. His brother, Leroy, focuses on mid to large industrial and land deals for national and international clients, while he prefers office development and investment deals. Commercial Properties’ listings include more than 20 million square feet for sale/lease and 160 projects under property management, totaling 6 million square feet. Current projects are the Phoenix-Mesa Gateway Airport, Wild Horse Pass Corporate Center and Reliance Broadway with companies such as IndCor Properties, The Randall Group, Deutsche Bank, St. Paul Properties, CrownWest Realty, Omninet Capital and Lennar Corporation . The company has more than 50 brokers and occupies two local offices. Commercial Properties has recently expanded and is recruiting new brokers in the industrial, office, retail, land and multifamily sectors.