AriZona Real Estate insider!

Hey everyone, sorry for the delay on this post—I was out in Las Vegas last week! The National Association of Realtors (NAR) just released their July 2024 Commercial Real Estate Market report, and it looks like the market is dealing with some challenges. But what does this mean for our beloved Phoenix? Let’s dive into the key points and see how they might impact our city.

Office Properties: Still Struggling, But There’s Hope

The report shows that office buildings are having a hard time filling up, with a lot of empty spaces still sitting around. Even though this sounds bad, Phoenix might be in a better spot than other cities. Many businesses here are looking for smaller offices or flexible workspaces, especially with more people working from home still.

For Phoenix, this could mean that office spaces that can easily be changed or offer cool shared amenities might start to get more attention. Companies are still figuring out what they need, so there could be a chance for our local market to pick up.

Multifamily Properties: People Are Renting More

The demand for apartments and other rental properties is strong, and that’s true here in Phoenix too. With mortgage rates staying high, buying a home is tough for a lot of people, so they’re choosing to rent instead.

This means there are good opportunities for developers and landlords in Phoenix. But because the market is competitive, renters are looking for more than just a place to live—they want nice amenities, community spaces, and locations close to shops and entertainment.

The good news is that rents are coming down in the Phoenix area, and as you can see, it did not make the top 10 list of areas where rent is growing the fastest.

Retail Properties: Tight Supply, But Fewer Shoppers

Retail spaces are in short supply across the country, and that’s also happening in Phoenix. But even though there aren’t many spots available, fewer people seem to be looking to open new stores.

In Phoenix, this might mean that while prime retail spots are still in demand, other areas might struggle to find tenants. To attract customers, businesses and landlords will need to create experiences that people can’t get online, like combining shopping with dining or entertainment.

Industrial Properties: Things Are Slowing Down

The industrial sector, which includes warehouses and factories, has been doing really well over the past few years, especially with the rise of online shopping. But now, demand is slowing down, according to the NAR report.

Phoenix has been a key location for industrial spaces, especially because of its role as a logistics hub. But with the market cooling off, it’s important to watch how consumer habits change and be ready to adapt.

As you can see, Phoenix made the top list below for the strongest 12-month absorption.” Meaning that over the past 12 months, Phoenix has seen one of the highest rates of space being occupied (or “absorbed”) in the market, indicating strong demand for properties in the area.

Hotel Properties: Slowly Getting Back to Normal

The NAR report says that hotels are starting to bounce back, but they’re not quite back to where they were before the pandemic. This is important for Phoenix, which relies a lot on tourism.

Hotels here that can adjust to new travel trends—like offering better work-from-hotel options or more flexible booking—might do better as the industry continues to recover.

What’s Next? Stay Flexible

The July 2024 report shows that the commercial real estate market is going through some changes. For Phoenix, the key will be staying flexible and ready to adapt to these new trends. Whether you’re involved in real estate or just keeping an eye on the market, it’s important to stay informed and be ready for what comes next. If you’re reading this and have any additional insights on the commercial real estate market in Phoenix or nationally, feel free to share them in the comments! I’d love to hear your thoughts.