This is becoming a common situation in the Phoenix, and persuading an owner-user to sell has been the primary strategy of brokers. When they can persuade owners, there is a swift sale. “There are several 1031 exchange buyers in the market,” says Rogers. “If an owner-user is looking to sell now, we can secure an offer within the first 30 days, or less. For buyers, it is more difficult, and sellers with 1031 exchanges are going to need to be open given the lack of product right now.”

Deer Valley is a new industrial submarket in Phoenix, and the investment demand and explosion of growth is a perfect example of the activity rampant throughout Phoenix. Investors are arriving to find better quality product at higher cap rates than what you would find in other more mature West Coast industrial markets. “There is a ton of competition between buyers on product with a quality tenant in place,” Rogers adds. “We have seen a lot of California buyers coming here to buy product at 6% and 7% cap rates. The Deer Valley market is a newer market in Phoenix, and buyers from outside of the state are coming to buy newer buildings at a higher cap rate. In California, buildings would be 30 to 40 years old. Here, they get a quality building at a higher cap rate.”