Mike Schwab

Land investment activity is expected to pick up in the first quarter, in response to high demand for multifamily units in Phoenix. Investment sales slowed at the end of the year during the holiday season, as is common for land deals. At the start of the year, however, the market is expected to spring back as developers continue to look for multifamily development opportunities.

“There is nothing on the horizon, both nationally and locally, to disrupt the current market cycle. Interest rate increases, higher construction costs, both horizontal and vertical, and tight labor markets will continue to impact new home affordability,” Mike Schwab, principal and designated broker at Land Advisors Organization, tells GlobeSt.com. “Less affordability will cause certain potential new home buyers to stay on the sideline and remain in rental property.  Aforementioned bodes well for the multi-family developers and existing multifamily product in sub-markets where new home affordability is an issue.”

The holiday season is typically a slow period for land investment, especially considering that construction financing allocations have typically run out by the fourth quarter. “We notice that investment activity generally slows during the holiday season as decision-makers are out of the office more often between Thanksgiving and New Year,” Schwab says. “Once the new year hits and everyone is back in the office, it's business as usual.”