Pete O'Neil

Investment sales have rebounded in Phoenix after a slow start to the year. According to the latest research from Colliers International, second quarter office investment sales were up 40% over the first quarter, while industrial sales increased 12%. The two sectors led commercial investment activity in Phoenix, with the second quarter sales boosting activity for the first half of the year to match year-over-year sales volumes in the first half of 2017. Investment sales have grown steadily in the last few years as the Phoenix market continues to improve.

“The office and industrial markets have really strengthened. Industrial had been on an improvement cycle for several years, and it is really hitting a stride now with vacancy in the low- to mid-7% range. That is a very tight and efficient market, and there is a lot of demand,” Pete O'Neil, research director at Colliers International, tells GlobeSt.com. “So, Phoenix is popping up on the radar for a lot of investors, and that has really fueled activity and pricing. On the office side, a lot of national investors won't look at a market when the vacancy rate is too high, but the office market has stabilized to a point where the vacancy is around 15%. Office and industrial have both shown the level of improvement to where more people are evaluating opportunities that they might have previously passed. We have had some really good momentum in the market, which translates into investment activity.”

While transaction volumes dropped in the first quarter, it wasn't a sign of waning interest or investment activity. O'Neil says that a decrease in sales volume is typical for the start of the year. “It is not uncommon for the first quarter to slow down. People often like to get deals done before the end of the year, and that can often take demand away from the first quarter,” he adds. “So, that is not uncommon. Also, the pipeline fills a little bit in the first quarter, which fuels demand for the second quarter.”