Phoenix and Tucson Getting Back to Pre-Pandemic Levels

By: Elliott D. Pollack & Company

A quick analysis of important economic data released over the last week

Recent data and analysis are showing continued optimism in the job markets as well as pain points in the residential real estate sector driven by supply side constraints.

For the U.S., leading indicators jumped up for the month and all components of that index were positive. This provides additional confidence that U.S. GDP is on track with projections of an estimated 6.0%. Retail sales retreated somewhat, driven mainly by a decrease in auto purchases. Lack of government stimulus funds may be the culprit here, as well as the continued shift of consumer purchases from goods to services. Industrial production was positive and is approaching pre-pandemic levels. Homebuilder confidence dropped again, mainly attributed to complaints about rising costs and supply shortages. Housing activity was mixed. Completions were up for the month and year, total permitting was positive (though single family permitting declined), and housing starts declined for the month.

Here in Greater Phoenix, we had another positive employment report with the private sector adding over 16,000 jobs. As of July, the region has recovered 99% of the jobs lost and only needs 2,500 more to reach February 2020’s level. Greater Tucson continues to climb and has recovered 74.8% of jobs lost. The State as a whole has recovered 93.7%.

In the local single family sectors, we have mixed feelings based on the latest data from RLBrownReports.com. In Greater Phoenix, both permits and new home sales were down from a year ago, while resales were only up slightly. Despite the one-month decline compared to a year ago, all three measurements are up on a year-to-date basis from 2020. Similar story in Greater Tucson, with permits and new home sales below last year’s level. But 2021 has still been a great year for permits and resales in Tucson as they have outperformed 2020.

In the multi-family sector, rent increases have been dramatic, with demand far outpacing supply in the market. RealData, Inc. reported 9,542 apartment units delivered in Maricopa County over the last 12 months (2020Q2 – 2021Q2). However, over that same period, over 16,700 apartments were absorbed, which has caused vacancy to drop from 8.5% down to 6% despite the increase in supply. Not surprisingly, rents have jumped 10% since last year. This is troubling from an affordability standpoint as well as simply an availability perspective. Housing supply is currently not keeping pace with economic and population growth.

U.S. Snapshot:

Leading indicators increased 0.9% in July. This bodes well for real GDP growth despite fears related to the COVID Delta variant and inflation.
Retail sales declined 1.1% in July but were up 15.8% from a year ago. The monthly decline was larger than expected (forecasted for a 0.3% decline). By category, automobiles posted the largest decline (-3.9%), followed by clothing stores (-2.6%). Some of this decline may be attributed to government stimulus funds being spent in previous months that is now no longer available. There is also an ongoing shift from retail goods to services. Despite that, July’s $617.7 billion remains near the all-time high level reached back in April ($628.8 billion).
Industrial production increased 0.9% and 6.6% from a year ago, according to the latest data from the Federal Reserve. This was the fastest pace since March. July’s level remains below the pre-pandemic level.
NAHB’s homebuilder confidence index fell to the lowest level in 13 months. Higher costs and supply shortages were cited as reasons for the decline. August’s reported level of 75 remains well above the 50 threshold that indicates that more builders view conditions as good than poor.
Total U.S. building permits increased 2.6% in July but single family permits declined 1.7%. Total housing and single-family housing starts both declined in the month of July, but are still above levels seen one year ago. Housing completions month-over-month and year-over-year were both in positive territory.

Arizona Snapshot:

The State of Arizona added 6,100 jobs in the month of July. Year-to-date, the state is up 2.0% or 57,900 jobs. Greater Phoenix saw an increase of 9,200 jobs bringing the year-to-date growth rate to 2.6%. Greater Tucson on the other hand, saw a slight decline of 0.3% or 1,300 jobs, but its year-to-date growth rate remains positive at 0.7%.
On a seasonally-adjusted basis, Greater Phoenix is approaching its pre-pandemic employment level. As of July, it has recovered 99% of the jobs lost and only needs 2,500 more to reach its previous peak February 2020 level. Greater Tucson continues to climb and has recovered 74.8% of jobs lost.
The State as a whole has recovered 93.7% of the jobs lost in March and April of 2020. The majority of sectors have made large strides in their recovery including Trade, Transportation & Utilities and Financial Activities that have fully recovered. The largest net gains occurred in sectors most affected by the pandemic like Leisure & Hospitality. Only the Government sector has had additional job losses since the recovery started.
In Greater Phoenix, both permits and new home sales were down from a year ago, while resales were only up slightly. Despite the declines from a year ago, all three measurements are up on a year-to-date basis from 2020.
Similar story in Greater Tucson with permits and new home sales below last year’s level. 2021 has been a great year for permits and resales in Tucson as they have outperformed 2020.
In the multi-family sector, rent increases have been dramatic, with demand far outpacing supply in the market. RealData, Inc. reported 9,542 apartment units delivered in Maricopa County over the last 12 months (2020Q2 – 2021Q2). However, over that same period, over 16,700 apartments were absorbed, which has caused vacancy to drop from 8.5% down to 6% despite the increase in supply. Not surprisingly, rents have jumped 10% since last year.

Phoenix-based RestorationHQ ranks No. 3737 on 2021 Inc. 5000

Magazine reveals annual list of America’s fastest-growing private companies, the Inc. 5000

PHOENIX, ARIZONA – Inc. magazine revealed that Phoenix-based RestorationHQ is No. 3737 on its annual Inc. 5000 list, the most prestigious ranking of the nation’s fastest-growing private companies.

RestorationHQ, an emergency services contractor, boasted growth of 89 percent. It is one of 117 Arizona-based companies to make the Inc. 5000 ranking.

The list represents a unique look at the most successful companies within the American economy’s most dynamic segment – its independent small businesses. Intuit, Zappos, Under Armour, Microsoft, Patagonia, and many other well-known names gained their first national exposure as honorees on the Inc. 5000.

Celebrating its fifth anniversary in 2020, RestorationHQ attributes its growth and success to its core values.

“Through our core values, we create partnerships; we are teammates,” said RestorationHQ Owner Sergei Guk. “Those core values include a can-do attitude; a thirst for learning; professionals who are personable and enjoyable to work with; taking extreme ownership and being trustworthy; and emphasizing an attention to detail. We train our crews as emergency responders from the start. We create and refine processes to be the most efficient, in and out of the field.”

RestorationHQ services include emergency response and mitigation from water intrusions and fire damage; mold remediation; asbestos abatement; hazmat/bio-cleaning services; post-mitigation reconstruction and other building related emergency issues.

Not only have the companies on the 2021 Inc. 5000 been very competitive within their markets, but this year’s list also proved especially resilient and flexible given 2020’s unprecedented challenges. Among the 5,000, the average median three-year growth rate soared to 543 percent, and median revenue reached $11.1 million. Together, those companies added more than 610,000 jobs over the past three years.

Complete results of the Inc. 5000, including company profiles and an interactive database that can be sorted by industry, region, and other criteria, can be found at www.inc.com/inc5000. The top 500 companies are featured in the September issue of Inc., which is now available.

“The 2021 Inc. 5000 list feels like one of the most important rosters of companies ever compiled,” said Scott Omelianuk, editor-in-chief of Inc. “Building one of the fastest-growing companies in America in any year is a remarkable achievement. Building one in the crisis we’ve lived through is just plain amazing. This kind of accomplishment comes with hard work, smart pivots, great leadership, and the help of a whole lot of people.”

RestorationHQ holds more than 20 current certifications, trainings, and safety courses including the IICRC (the Institute of Inspection, Cleaning and Restoration Certification, the certifying body for the inspection, cleaning and restoration industry), AHERA Accreditation (Asbestos Hazards Emergency Response Act), EPA, OSHA, and other governing bodies responsible for compliance regulation and continued education.

“What has helped us grow is that we embrace restless resiliency,” Guk said. “We lose sleep so our customers don’t have to. We plan for agility and are prepared to pivot.”

For more information visit www.RestorationHQ.us.

Two Industrial Buildings Sell for $3.4 Million in Phoenix

PHOENIX, ARIZONA — The sale of 3440-3502 E Broadway Rd in Phoenix, AZ recently recorded. The property consists of two industrial buildings totaling 27,816-square-feet. The property sold to a local real estate investment firm.

The sales price was $3,337,920 which equates to $120 PSF and the Close of Escrow was August 16, 2021.

Max Schumacher and Patrick Sheehan of Rein & Grossoehme represented both the Buyer and Seller in this transaction. Max Schumacher and Patrick Sheehan specialize in the leasing and sale of industrial properties in Phoenix.

Rein & Grossoehme specializes in the sale of investment properties and retail, office and industrial leasing.