TUCSON, Arizona – Cushman & Wakefield Picor has published its midyear market reports for Tucson. Here’s a summary for each of the market segments: industrial, multifamily, office and retail.

TUCSON MARKET OVERVIEW
National consumer sentiment remains favorable amid signs of positive economic direction. Arizona continues to outpace the nation in job creation, with an unemployment rate back to a level last seen before the Great Recession. Tightening labor markets are translating into faster wage and income growth which should boost retail sales. Overall, the outlook calls for the state’s economy to accelerate modestly in the near term. Job growth in the Tucson metro area has accelerated significantly due to recent announcements from large in bound employers.   While single family home prices rose 6.0% nationally, the one-year price changes for the first quarter 2017 were 8.0% for Phoenix and 5.4% for Tucson. According to Bright Futures Real Estate Research, permits for new home construction in metro Tucson in May were up 51.8% from year earlier levels.

INDUSTRIAL OUTLOOK
Absorption continues to be strong as companies expand and new companies announce relocations to Tucson. Vacancy will be lower in smaller spaces under 10,000 square feet and rents will continue to rise. Activity will accelerate in larger spaces with improved absorption in this area. Land activity has been anemic for a number of years and will remain so until sale and lease prices approach the cost of new construction.

MULTIFAMILY OUTLOOK
The rental market continues to strengthen quarter after quarter.  We are making up for the years of stagnant and minimal rental growth Tucson felt compared to the much quicker acceleration by neighboring markets.  Investor interest continues to be at a high with the lack of inventory driving the values of apartments.  We have seen a significant pick-up in available student housing opportunities with many owners/developers looking at exit strategies.   We anticipate similar patterns for the rest of 2017 in the Tucson apartment market

OFFICE OUTLOOK
Expect continued market improvement through the balance of 2017 with greater transaction activity due to business growth. With the recent announcements of local job growth and new jobs coming to town, Tucson is also experiencing a rise in consumer confidence. It seems that the local municipalities gaining a better understanding of the importance of offering incentives aimed at attracting employers. Tucson’s evolving healthcare landscape will remain a significant market player. The full medical economy from construction, practice management, jobs and facilities will continue to improve as Tucson Medical Center, and new comers Banner and Tenet complete their investments in the Tucson economy. Downtown will experience continued residential, retail and office development and occupancy growth. The Sun Link Streetcar has proven to be a real activity magnet over its Downtown/ University of Arizona route. Despite continuing debate regarding national healthcare, and the North American Free Trade Act, the current economic direction of the state and local market seem positive.

RETAIL OUTLOOK
As the Tucson retail market continues on a growth trajectory, we expect lease rates to edge upward. Investment properties will continue to enjoy historically low CAP rates, and that trend should remain consistent , with no movement either way in CAP rates or investor yield expectation. Tucson’s reputation as a growth market with continual  positive employment news makes Tucson a desirable investment market for investors fleeing the ultra-low CAP rates seen in Coastal markets.

To read the full reports go to Cushman & Wakefield | Picor Market Reports

The Greater Phoenix Q4 office market ended 2014 on an upswing, with hiring on the rise, healthy levels of net absorption and vacancy continuing to tighten. Investment activity has accelerated in response to the strengthening conditions, and prices are pushing higher as landlords implement steady rent increases.

In summary:

>> Vacancy in the Greater Phoenix office market continued to trend lower, ending the year at 17.8%. This marks the fifth consecutive year where vacancy has improved.

>> Vacancy is tightening across all property classes, but the fastest rate of improvement is being recorded in the Class A segment. Despite the completion of approximately 400,000 square feet of Class A spec space in 2014, vacancy in Class A buildings declined 240 basis points to 16.8 percent from year-earlier levels.

>> Net absorption dipped from more than 1 million square feet in the third quarter to approximately 880,000 square feet in the fourth quarter. Despite the modest quarterly dip, net absorption has now been positive in each of the past 11 quarters. Net absorption for 2014 topped 2.9 million square feet, up from approximately 1.7 million square feet in 2013.

>> Continued absorption is helping to drive rents higher. Average asking rents ended 2014 at $21.08 per square foot, 3.3 percent higher than one year ago. Further increases are forecast for 2015.

Office Sales Activity
Office sales surged in the third quarter and rose another 10% in the fourth quarter. In all, sales of office buildings in the second half of the year spiked nearly 40% from first half. Recent transactions were generally larger than average, with deals over $20 million accounting for more than 20% of the activity in the quarter.

For the year, the number of properties sold increased 8% from 2013 levels. With median reaching $113 per square foot, up from $112 per square foot in the first nine months of the year. Prices are being supported by an ongoing recovery in property fundamentals, particularly with rents on the rise, in addition to interest rates remaining low.

For the year, cap rates averaged in the low-to mid-7 percent range.
The Greater Phoenix office market is in a steady recovery cycle, setting the stage for further strengthening in 2015. Employment growth in the Phoenix metro area has been modest to this point in the cycle, and gains have been concentrated in office-using sectors of the economy such as professional and business services and finance. Looking ahead to 2015, gains in these white-collar segments should continue, but growth should extend more broadly across the economy and total employment expansion should top the rate achieved in recent years. This more widespread economic strengthening will prove beneficial to the office market as a whole, and net absorption should accelerate to 3.2 million square feet in 2015. With absorption on the rise and vacancy tightening, rent growth is forecast to accelerate.

See the full report here: Phoenix Office Report 4Q 2014

Biggest Monthly Increase Since U.S. Foreclosure Activity Peaked in March 2010; Top 5 State Foreclosure Rates in MD, FL, NV, OH, IL

IRVINE, Calif. – RealtyTrac® (www.realtytrac.com), released Thursday its U.S. Foreclosure Market Report™ for October 2014, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 123,109 U.S. properties, an increase of 15% from the previous month but still down 8% from a year ago. The 15% monthly increase was the largest month-over-month increase since U.S. foreclosure activity peaked in March 2010. The report also shows one in every 1,069 U.S. housing units with a foreclosure filing during the month.

A total of 59,869 U.S. properties were scheduled for foreclosure auction during the month, up 24% from the previous month and up 7% from a year ago to the highest level since May 2013. Scheduled foreclosure auctions in judicial foreclosure states, where foreclosures are processed through the court system, increased 21% from the previous month and were up 3% from a year ago and. Scheduled foreclosure auctions in non-judicial states increased 27% from the previous month and were up 14% from a year ago.

“The October foreclosure numbers are not a complete surprise given that over the past three years there has been an average 8% monthly uptick in scheduled foreclosure auctions in October as banks try to get ahead of the usual holiday foreclosure moratoriums,” said Daren Blomquist, vice president at RealtyTrac. “But the sheer magnitude of the increase this year demonstrates there is more than just a seasonal pattern at work. Distressed properties that have been in a holding pattern for years are finally being cleared for landing at the foreclosure auction.

Referring to the Mortgage Forgiveness Debt Relief Act, “With the November elections behind us, hopes of a stronger housing economy in 2015 are centered on the restoration of the short sale income forgiveness provision of the federal income tax code,” said Michael Mahon executive vice president and broker at HER Realtors, covering the Columbus, Cincinnati and Dayton, Ohio markets. “This at a time when consumers are being provided no financial support from the federal government concerning income tax relief when entering into short sale solutions with servicers. These economic catalysts are being considered much of the root causes regarding recent month-over-month increases of foreclosure activity.”

Scheduled foreclosure auctions increased from a year ago in 29 states, including Oregon (up 399%), North Carolina (up 288%), New Jersey (up 118%),  New York (up 89%), Connecticut (up 60%), Nevada (up 53%),  Alabama (up 41%), Washington (up 36%), Indiana (up 36%), California (up 19%) and South Carolina (up 18%).

Other high-level findings from the report:

• Lenders repossessed 27,914 U.S. properties via foreclosure (REO) in October, up 22% from the previous month but down 26% from a year ago. October posted the largest monthly increase in REOs since June 2009.

• REOs increased from a year ago in 16 states, including Maryland (up 190%), Pennsylvania (up 25%), New Jersey (up 22%), Oregon (up 20%) and New York (up 18%).

• Overall foreclosure activity increased from a year ago in 10 of the nation’s 20 largest metropolitan statistical areas in terms of population, including Washington, D.C. (26% increase), Philadelphia (13% increase), Baltimore (13% increase), Riverside-San Bernardino in Southern California (8% increase), and New York (7% increase).

• Among the nation’s 20 largest metros, those with the five highest foreclosure rates were Miami (one in every 363 housing units with a foreclosure filing); Tampa (one in every 395 housing units); Baltimore (one in every 435 housing units); Riverside-San Bernardino in Southern California (one in every 495 housing units); and Chicago (one in every 553 housing units).

• A total of 56,452 U.S. properties started the foreclosure process in October, up 12% from previous month but down 4% from a year ago. This was the largest monthly increase in U.S. foreclosure starts since August 2011.

To read the full report click here.