Over the past couple years, the commercial real estate market in Phoenix, much like the area’s residential real estate market, saw significant declines. The Urban Land Institute, a non-profit organization that focuses on research and education efforts related to real estate issues, recently released its Emerging Trends in Real Estate report for 2014. This annual report is based on the opinions of top real estate executives and is considered by many to be one of the more important publications regarding the current state of the real estate market.ULI listed the Phoenix area as the 25th best place for individuals to invest in real estate. This is a marked improvement from last year, when Phoenix was ranked 33rd. Both large and small real estate investment funds are interested in Phoenix not only because of the city’s projected growth in population and employment, but also because it is a relatively inexpensive place to do business.
Overall, ULI believes that Phoenix’s population will grow by about 2.6 percent in 2014. Many of those moving to the area are projected to be between the ages of 20 and 34. In addition, the number of jobs available in the Phoenix area is expected to grow by about 2.4 percent, which means that many employers will need to seek out larger office spaces.
Currently, about 22 percent of office space in the Phoenix metro area stands vacant, which is a significant improvement from 2009, when the vacancy rate was about 27 percent. Vacancy rates in downtown Phoenix are much lower and, as a result, rent is on the rise. As new employers move into the area and office space becomes more scarce, experts estimate that commercial rental rates will rise between two and four percent through the end of 2015.
Of course, the projected increase in demand has also sparked new construction. About 700,000 square feet of office space are currently under construction in the Phoenix area and many believe that the region is likely to see even more construction as the year continues.
If you are considering the purchase, development or lease of commercial space, speak to an experienced real estate attorney. A real estate attorney can provide you with essential advice on how to protect your investment. For more information, contact an attorney today.