Middle Market Digest: This Week in Southwest

Apartment and industrial deals continue to dominate the Southwest market. This week, the Inland Empire saw a $30 million lease transaction in the Inland Empire and several apartment deals in Phoenix, which continue to drive the market activity there. Additionally, the industrial market in Phoenix has also picked up, with positive net absorption for the year and a strong third quarter performance. Here’s a look at this week’s trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.

BY THE NUMBERS

The Phoenix industrial market had 2.4 million square feet of positive net absorption in the third quarter, bringing the year-to- date gain to more than 6.8 million square feet. Total vacancy fell to 9.2%, down 140 basis points since the third quarter of last year. Chandler Airport led all Phoenix submarkets at 24.2% vacancy and Chandler was third at 17.1%. Northwest Phoenix was the tightest submarket cluster, at 6.9% vacancy, with West Phoenix North of Thomas Road showing the lowest vacancy rate of all submarkets at 3.0%, and West Phoenix South of Thomas Road close behind at 3.6%. Vacancies declined despite 1.7 million square feet of new deliveries during the third quarter, and with 4.5 million square feet of inventory currently under construction, there could be a temporary easing in the growth. Asking rental rates for all industrial properties rose to $0.59 per square foot on a triple-net basis, which represents a 7.3% year-over- year increase in rates. Total sales activity this quarter was consistent with the past few periods, amassing $335 million in dollar volume, up from $246 million during the second quarter. The median sale price for industrial assets stayed at $93 per square foot. The median cap rate was 6.9%, down from 7.1% at this time last year.