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Newmark Grubb Knight Frank managing director Pete Bolton is fresh from chairing a meeting with 15 fellow brokers at an ASU commercial brokers forum. Here are four major trends Pete sees going into Q2: 1) Investors are hot for industrial. Throughout Maricopa County, pension funds, REITs, and high-net-worth individuals have been craving industrial. “But you really can't find much industrial for sale,” Pete says. (We call this the Vanilla Pop Tart syndrome.) Assets that do hit the market are often earning more than the asking prices. One opportunity is in owner/user buildings. Phoenix has recently brought on roughly 6M SF of big-box industrial in the Southwest market. But companies with 300k SF to 1M SF requirements are mostly manufacturers doing build-to-suits vs. occupying existing structures, not boding well for big-box absorption. Overall, vacancies hover around 12%. 2) Class-A multifamily is overbuilt.Developers may not want to admit this, but Pete sees Class-A multifamily as having a bit too much product coming online. There are "6,000 to 9,000 doors in the next 18 months," he says. However, Class-B and Class-C investment is still marginally tipped in the seller's favor. 3) Office sees uptick in blend-and-extend. National tenants have been renegotiating leases, and Pete has seen many of these blend-and-extend deals over the past 18 months. For one, Special Loan Servicing inked a 45k SF deal at 2900 S Diablo Way (above) and after 14 months, expanded by 65k SF. Terminex took 33k SF in Glendale, and Century Link signed four separate leases totaling 20k SF. Although it's a buyer's market, office investors “have to be gutsy” to make a deal, as many owners are holding on and refinancing because the sector's slowly turning around. 4) Retail is hot, hot, hot.Well-anchored retail is selling like crazy, attracting up to 15 buyers per transaction, Pete says. (If King Solomon were a broker, he'd threaten to subdivide every space 15 ways to reveal the true buyer.) It's very submarket specific, however, with Camelback and Scottsdale as particularly favored areas. |
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Exeter Buys Prologis Warehouse Confident in Phoenix's industrial rebound, Pennsylvania-based Exeter Property Group has picked up the 251k SF Prologis Riverside Distribution Center at 2225 S 43rd Ave for $13.2M. Cassidy Turley's Andy Markham (here with son Will) brokered the deal with colleagues Mike Haenel and Will Strong. He tells us the facility is mainly home to Olympic Moving and Storage. (Should it ever leave, it probably knows a good mover.) He says Exeter was not only attracted to the in-place rent, but also that it has 160k SF of vacancy, which will provide some upside.  The buy comes at a time when capital is quite hungry for Phoenix-area industrial. That's despite the fact that fundamentals are slowly coming back. (CBRE reports metro industrial vacancies at 13.8%, relatively unchanged since the end of 2013.) Capital likes Phoenix because of its proximity to the Inland Empire and its low land costs. “Overall, the economy is getting healthy, so industrial should follow right along behind it,” Andy says.  Andy can also be found marketing Wentworth Property Co's 1.3M SF distribution center (above) at the corner of 59th and Van Buren that it plans to develop in a JV with Crow Holdings. He tells us the developers are soon breaking ground on the facility, and that it will be built on spec. He was also recently tapped by Blackstone to help sell 10397 W Van Buren, a 278k SF warehouse in Tolleson being vacated by Quaker/Pepsi. (Don't forget your hat, Man on the Oatmeal Container.) He's also selling the 303k SF former TJMaxx warehouse at 9704 W Roosevelt for Industrial Income Trust. |
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Baron Eyes
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YOU TELL US: Your Favorite
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