Despite the steep stock market drop this week, deal closings remain strong across asset classes. Multifamily sales dominated this week, providing evidence that the asset class will be favored again in 2018. Some of the highlights include a $27 million sale from TruAmerica in Moreno Valley, the sale of a $45 million apartment building in Chatsworth and a $16 million apartment community in Phoenix. Fourth quarter reports also continued to trail in, showing a strong Phoenix market. The retail sector this week is being highlight, posting gains for the fourth quarter. 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 fourth quarter of 2017 brought a spike in net absorption of retail space in Greater Phoenix, bringing the total for the year to more than 2.8 million square feet. This was the highest level of net absorption posted since 2007. Net absorption for fourth quarter exceeded 1 million square feet. A large portion of the absorption took place in high-income, fast-growing areas of the Southeast Valley area. Chandler and Gilbert combined to account for approximately 20 percent of the total net absorption for Greater Phoenix in 2017. Retail vacancy fell 50 basis points during the fourth quarter, ending the year at 8.4 percent. This is a decrease of 90 basis points from year-end 2016. Retail vacancy in the West Valley dipped 40 basis points in 2017 to just six percent. This is due in part to the growing economy in the West Valley, spurred partially by the extension of the Loop 303 freeway. Increased absorption and falling vacancy rates have spurred a rise in rental rates. Asking rental rates advanced 4.6 percent in 2017, finishing the year at $14.64 per square foot. While rates had increased the previous two years, rents rose at a steeper pace during 2017. The East Valley rental rates gained 5.8 percent in 2017, following a 4.1 percent increase in 2016. The sale of shopping centers slowed during 2017, down four percent from 2016 levels. Investment sales increased during fourth quarter over third. The median price in 2017 dipped below 2016, primarily because properties changing hands included more high-vacancy centers being sold as lease-up opportunities. The median price during 2017 was $114 per square foot, which represents a six percent decline from 2016. Cap rates feel slightly during fourth quarter, averaging seven percent. The average cap rate for shopping center transactions throughout 2017 was 7.4 percent, which is approximately 40 basis points higher than the 2016 average.

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