2017 Expected to Bring Economic Growth to Balance Struggling Retail Sector

Phoenix, Arizona –   Colliers International is reporting the Greater Phoenix retail market experienced positive net absorption in fourth quarter of 2016, pushing vacancy rates lower in a trend that prevailed through most of 2016.

Net absorption totaled approximately 545,000 square feet in the fourth quarter, bringing the year-end total to more than 1.5 million square feet.  This net absorption outpaced 2015 and provided a year-end vacancy rate of 9.5 percent.

Asking rental rates declined in the fourth quarter, but year-end rental rates were still 1.6 percent higher than a year ago.  The Phoenix metro area needs a surge in absorption during 2017 to motivate any significant boost in rental rate growth.

Retail construction escalated during the second half of 2016 and the year brought approximately 1.4 million square feet of new projects.  This is the largest annual total of new retail construction since 2009.  Approximately 500,000 square feet of the new construction delivered in 2016 was occupied by Fry’s Food, which is implementing a significant expansion plan.

Shopping center sales for 2016 outpaced 2015, but slowed during the last three months of the year.  Prices rose and cap rates compressed in 2016, which highlights the improving outlook for the Metro Phoenix retail market.  The region experienced a nearly 20 percent increase in dollar volume of sale transactions from 2015 to 2016, due in part to a spike in higher priced transactions over $40 million.  Grocers are expanding in this marketplace, so we anticipate an increase in grocery-anchored centers in 2017 and beyond.

The upcoming year is expected to bring more modest improvements to the retail real estate sector.  The local housing market is gaining traction and the overall metro Phoenix economy is growing.  These factors will support additional retail spending.  However, the nationwide retail market continues to experience store closures because of online shopping trends and poor performing locations.  Our city escaped the recent cuts by Macy’s, but any significant store closure announcements will dampen the projected growth that 2017 economic improvement will bring.

A copy of the full retail report can be accessed by clicking Here.

The following commercial leases were reported to the Real Estate Daily News for the Phoenix Commercial Lease Report from November 28 thru December 2, 2016.

INDUSTRIAL – 2910 S. HARDY, TEMPE
Broadway Industrial Park leased a ±25,619-square-foot industrial property located at 2910 S Hardy, Suite 104 in Tempe to Tier Power Systems, Inc. on October 24, 2016.  Bonnie C. Halley, CCIM, and Melissa Marks, Phoenix West Commercial, LLC, represented the tenant in the negotiation.

RETAIL – NEC of 43^rd AVE and PEORIA RD., PHOENIX
A retail lease for 6,000-square-feet within Ross Plaza at NEC of 43rd Ave & Peoria Rd. in Phoenix, AZ to Korean BBQ was recently consummated. The owner of the center is B.H. North 43rd Avenue, LLC.  Jared Lively of Rein & Grossoehme represented both the Landlord and the Tenant on this transaction.

INDUSTRIAL – 9950 W. VAN BUREN ST., AVONDALE
99^th Avenue Business Park leased a ±3,156-square-foot industrial space located at 9950 W Van Buren Street, Suite 101 in Avondale to Studio 21 Dance Academy, LLC on October 24, 2016.  Bonnie C. Halley, CCIM and Brian Gleason, SIOR, Phoenix West Commercial, LLC, represented the landlord and Melissa Marks represented the tenant in the negotiation.

INDUSTRIAL – 811 E. RILEY DR., AVONDALE
Dysart Business Park leased a ±2,600-square-foot industrial space located at 811 E Riley Drive, Suites 4 & 5 in Avondale to Thomas Jaurigue on October 13, 2016.  Ken Schawl, Phoenix West Commercial, LLC, represented the tenant in the negotiation.

RETAIL – 14455 W. GRAND AVE., SURPRISE
Grand Village Plaza leased a ±2,107-square-foot retail space located at 14455 W Grand Avenue, Suite C-122 in Surprise to Best Dollar Store on October 19, 2016.  Matt Harper, CCIM, Jennifer Tonoli, and Melissa, Marks Phoenix West Commercial, LLC, represented the landlord in the negotiation.

RETAIL – 21001 N. TATUM BLVD., PHOENIX
Brian & Tom Woods- Colliers, represented uBreakiFix  on a 5 year lease, signed in November 2016, with Vestar at Desert Ridge Marketplace 21001 N. Tatum Blvd, Suite LL-3, Phoenix, AZ, for 1,600-square-feet.  Torrey Briegel and Cameron Warren of Phoenix Commercial Advisors represented the Landlord.  Signed in November 2016.

OFFICE – 13575 W. INDIAN SCHOOL RD., LITCHFIELD PARK
Litchfield Park Plaza leased a ±1,509-square-foot office condominium located at 13575 W Indian School Road, Suite 300 in Litchfield Park to Dr. Samer Muala on October 13, 2016.  Bobbie Lorraine Mastracci, CCIM, designated broker, Phoenix West Commercial, LLC, represented the landlord in the negotiation

RETAIL – NEC of TATUM BLVD. And DYNAMITE RD., CAVE CREEK
A retail lease for 1,401-square-feet within Tatum & Dynamite Shoppes at NEC of Tatum Blvd & Dynamite Rd. in Cave Creek, AZ to Vicky’s Nails & Spa was recently consummated. The owner of the center is Bengin, LLC.  Jared Lively of Rein & Grossoehme represented both the Landlord and the Tenant on this transaction.

RETAIL – 3787 S. GILBERT RD., GILBERT
Brian & Tom Woods- Colliers, represented Vestar on a 7 year lease, signed in November 2016, with Poke Hale at Crossroads Towne Center 3787 S. Gilbert Road, Gilbert, AZ, 85234, Suite F-2 for 1,344-square-feet.  Courtney Auther Van Loo of Cushman & Wakefield represented the Tenant.

OFFICE – 4252 N. VERRADO WAY, BUCKEYE
Main Street at Verrado leased a ±1,030-square-foot office located at 4252 N Verrado Way, Suite 100 in Buckeye to Pioneer Title Agency on October 1, 2016.  Bobbie Lorraine Mastracci, CCIM, designated broker, Phoenix West Commercial, LLC, represented the landlord in the negotiation.

RETAIL – 5008 W. NORTHERN AVE., GLENDALE
Northern Plaza leased a ±1,000-square-foot retail space located at 5008 W Northern Avenue, Suite 5 in Glendale to Express Smoke Shop on October 10, 2016.  Matt Harper, CCIM, Phoenix West Commercial, LLC, represented both the landlord and the tenant.

RETAIL – 13839 W. BELL RD., SURPRISE
Shops at Surprise leased a ±1,000-square-foot retail space located at 13839 W Bell Road, Suite 105 in Surprise to SK8 Haus, LLC on October 13, 2016.  Jennifer Tonoli and Melissa Marks, Phoenix West Commercial, LLC, represented the tenant in the negotiation.

Send commerical sales and leases to REDailyNews@outlook.com

Tucson showing strong signs of market recovery

Phoenix, AZ — Colliers International in Greater Phoenix has negotiated the sale of a portfolio containing five apartment communities in Tucson.  The properties were the first Arizona acquisition for a Colorado-based investment group and commanded a sale price of $47.5 million ($47,311 per unit) in a bulk portfolio sale.

Hamilton Zanze of San Francisco (Mark Hamilton, CEO) sold the portfolio to Monarch Investment & Management Group, LLC of Franktown, CO (Andy Newell, CEO).  Cindy Cooke and Brad Cooke of Colliers International in Greater Phoenix served as the exclusive sales agents for the portfolio.

“This portfolio was a great investment due to the strong cash flow and overall condition of the properties,” says Cindy Cooke, senior executive vice president with Colliers International in Greater Phoenix.  “The economic recovery in Tucson follows the Phoenix economy.  Phoenix has realized incredible appreciation in the recent years, so Tucson investors are well positioned to benefit from similar trends.”

Greater Tucson added approximately 13,000 jobs in the last 12 months and more than 240 businesses have opened in Downtown Tucson since 2008.  Mid-year 2016 statistics report Tucson’s multifamily market with a 6.8% vacancy.  Rental rates have increased 5% overall in the past 12 months in Tucson.  However certain properties have seen recent rent increases of 11-13%, and rates are expected to continue to climb and reach the peak rents of 2008 and higher.

The Tucson portfolio included:
– Hampton Park, a 160-unit community located at 8600 E. Old Spanish Trail in Tucson
– San Mateo, a 254-unit community at 2800 S. Mission Rd. in Tucson
– Solano Springs, a 152-unit community at 6340 S. Santa Clara Ave. in Tucson
– Lakeside Apartments, a 310-unit community at 8250 E. Golf Links Rd. in Tucson
– Highland Apartments, a 128-unit community at 555 N. 7th St. in Sierra Vista

Each of these properties was constructed between 1973 and 1985.  The communities contain 1,004 units totaling 686,314 square feet. The portfolio averaged 94% occupancy at the time of sale.