Commercial Properties, Inc., Arizona’s largest locally owned commercial real estate brokerage, provides a brief overview of Phoenix’s commercial real estate activity, and reports on the top five transactions in June from second quarter.
Jeff Hays, Sr. Vice President – Corporate Services commented on the Phoenix industrial sector. “In general, the industrial market continues to improve in deal velocity, especially in the 25,000-100,000/sf range.” Hays has accumulated over 30 years of experience in Industrial sales, leasing and investments. “There have been several new cross-dock and maintenance facilities recently constructed in the Southwest Submarket, including Old Dominion Freight Line at 79th Ave & Van Buren, and R+L Carriers at 43rd Ave & Gibson Lane. The Phoenix leasing market ranges from $350-$500/door, depending on the age, size (number of doors/site), and general condition of the terminal,” said Hays.
Eric Butler, VP of Sales & Leasing, in CPI’s Scottsdale Office Group commented on the second quarter office activity for Phoenix. “Demand for office space continues to improve, which has provided some lift, resulting in higher rental rates in most segments. We are observing increased competition between tenants. Landlords are receiving multiple bids on suites and offering less free rent up front compared to last quarter. Outside broker commissions in some areas are starting to return to pre-recession levels, helping Landlords with their bottom line profitability. Location and quality space continues to be the priority for users; however, there are fewer choices for those types of space, which is driving up competition for nicer properties.”
Thomas K. Semancik has been actively involved in the sale of commercial real estate in Arizona since 1993. Semancik commented on the Phoenix Q2 retail sector activity. “The greater Phoenix retail investment market is experiencing higher prices as vacancy drops. Class “B” and “C” properties are finally filling up after the great recession. Overall capitalization rates have risen slightly possibly due to the sale of these “B” and “C” properties to late comers to the marketplace. This trend is coupled with a divergent trend toward quality at the top; investors are aggressively paying for retail properties that meet all the right criteria for location, age, and tenant mix.
Semancik added, “Many of these buyers are coming from California and the Pacific Northwest where prices have skyrocketed, making Phoenix prices appear more affordable. A final influence in the current retail market is the re-emergence of investors completing IRS Section 1031 exchanges, which had diminished greatly in the downturn.”
Donn Kinzle, Vice President of CPI’s Land Group, commented on the Phoenix land sector: “By projecting out the current demographic trends in Arizona over the next ten years, the data shows that land will be a very strong investment for the future. The primary driving force for all land sales in the second quarter of this year was the sale of single-family land parcels. Strengthening home prices and increased permitting continues to add a strong foothold for the local land markets. One interesting side note to the current Arizona land market is the addition of water rights. We are seeing investment groups that are investing in farm properties for water rights and certificates.”
In total, the firm completed 185 transactions in June for a total of 6,587,370 square feet.
Trent Rustan & Josh Gosnell represented the buyer in the purchase of the 108,040 SF Corporate Center at Kierland. This Class A office property is located at 14635 N Kierland Boulevard, in Scottsdale, AZ. Kierland Sky, LLC purchased the property for $24.35 million.
Brandon Koplin & Dave Nash represented the seller of a 25,994 SF office building located at 4811 N 7th Street in Phoenix, AZ. The buyer, WDF – 4 Wood Camelback Owner, LLC purchased the property for $4.65 million in total consideration.
Ken Elmer & Ron Schooler completed a sale for the owner of the 19,132 SF, Class B office building at 13845 N Northsight Boulevard in Scottsdale that sold for $3.8 million. Ken and Ron also sold represented the buyer in the purchase of The Links in Scottsdale. The 15,816 SF fully leased office building is located at 15615 N 71st Street and sold for $3.3 million in total consideration.
Tyson Breinholt and Shane McCormick represented the buyer in the purchase of Gilbert Cove, an office medical center originally built in 1983. The 26,654 SF complex was 89.5% leased and is located at 1400 N Gilbert Road in Gilbert, Arizona just south of the U.S. 60 freeway. Community Investments, LLC., purchased the property for $3.22 million in total consideration.