Commercial Real Estate & Business News – February 25, 2015

Leverage on CMBS Multifamily Loans Gets Higher

CMBS lenders now offer higher and higher levels of leverage to make deals—especially as prices for apartment properties rise compared to rents. These high-leverage loans worry market watchers like the bond-rating agencies. These ratings agencies are raising their credit enhancement levels. Bond buyers are getting pickier what loans they will accept... Read more »

U.S. Home Sales Falter to Start Year

Sales of previously owned homes slowed in January, a reflection of the rising prices and tight supplies that could constrain the housing market this year. Existing-home sales fell 4.9% last month from December to a seasonally adjusted annual rate of 4.82 million, the National Association of Realtors said on Monday, the slowest pace in nine months. Weather didn’t appear to be a big factor in the report, which showed sales falling across all regions of the country... Read more »

Phoenix Area Attracting More Canadian Residents, Businesses

For decades, our neighbors up North have been relocating their businesses to the Valley. Here's a look at some that came recently and others that have been here for a while. Read more »

REITs See Move Outs to Homeownership Drop in 4Q

Amid reports of an improving for-sale market, apartment REITs actually saw the number of renters who moved out to buy new homes drop 300 basis points to 15.2% (of total move outs) year-over-year in the fourth quarter of 2014. When single-family sales are strong, the REIT group as a whole can see as many as 20% of their move outs go to homeownership... Read more »

Arizona Manufacturing Jobs Steady But Slumping

Arizona is tied for last place in one national ranking – and it's a good thing. Only 1.3 percent of the state's employment is in non-durable goods manufacturing. On the other side of durability, the state is solidly in the middle of the pack and steady in percent of workforce involved with durable goods manufacturing. Those rankings are slightly glimmering good signs for the export economy because jobs in those industrial sectors are holding steady... Read more »

Commercial Real Estate & Business News – February 24, 2015

Phoenix-area apartments and rental homes remain affordable compared to those in other big U.S. cities, but rate increases here are starting to rise faster than the national average. Median rents in the Phoenix metro area climbed 5.6 percent over the 12 months through January, according to the Zillow Rent Index. That was higher than the 3.3-percent average hike in the 35 larger cities studied... Read more »
Bankrupt electronics retailer RadioShack Corp received court approval Friday to sell the leases to more than 1,100 stores that it will close by the end of this month. U.S. Bankruptcy Judge Brendan Shannon approved the bidding and auction process for the leases, which has been underway since the Fort Worth, Texas-based chain sought bankruptcy protection earlier this month. It plans to close nearly half of its 4,000 locations, including more than a dozen in Arizona... Read more »
IRIS USA, Inc., a subsidiary of IRIS Ohyama, Inc. headquartered in Sendai, Japan, will build its new Western United States Regional Headquarters in Surprise. The new facility represents a $33-$40 million investment, 100 new jobs, and $800,000 of new city revenues in the first year of operations. IRIS USA’s new 280,000-square-foot building... Read more »
The economic news, for the most part, continues to be good. Yet, new construction remains weak for this point in the cycle. This is true nationally and in Arizona. As we have said before, the economy is as good as it is going to get in the non-construction sectors. That’s why this has been the “non-feel good” recovery... Read more »
Healthcare real estate in Phoenix also has potential. Average vacancy rate at 21.6 percent. At the same time, Phoenix ranked ninth on Colliers’ list of U.S. cities with the largest forecasted increase in population 65 years of age and older between now and 2019. Average quoted rents in the city in 2014 were decent, at $22.62 per sq. ft. Meanwhile, investors were paying average cap rates of 7.7 percent and average prices of $122 per sq. ft. for Phoenix assets, compared to the average... Read more »

Commercial Real Estate & Business News – February 23, 2015

Microsoft Could Land Big Data Center In Phoenix

Microsoft Corp. could locate a large new data center in Phoenix. A commercial real estate official said the Microsoft data center could be landing at Union Hills Drive near Interstate 17. The project could total as much as 575,000 square feet and the transaction may be completed via private equity firms and other data center entities even though it will be Microsoft operations, according to the industry executive who asked not to be named... Read more »

Small Apartments: Are We Building Too Many?

In the current supply cycle, many new buildings include a large share of studios and one-bedroom apartments. That’s understandable, given the continued importance of millennials as a prime target market this year. These small units fit Gen Y renters’ needs well, since this group is willing to trade space for a good location and attractive amenities. With supply coming in at a continued good pace, however, the question now is whether small units will continue to perform as well in the near future as they do today... Read more »

Market Trend: Phoenix Retail Deliveries, Construction and Inventory

During the fourth quarter 2014, 21 buildings totaling 377,959 square feet were completed in the Phoenix retail market. Over the past four quarters, a total of 700,237 square feet of retail space has been built. There were 427,089 square feet of retail space under construction at the end of the fourth quarter 2014... Read more »

State Farm Exec: Transit Helped Tempe Get $600m Hub

Tempe's public transportation network, which includes neighborhood shuttles, buses and light rail, played a major role in State Farm's decision to build a massive regional headquarters overlooking Tempe Town Lake, a company executive said last week. State Farm will anchor a $600 million development by Sunbelt Holdings and Ryan Companies... Read more »

Hilton Phoenix Airport Hotel Transformed

Waramaug Hospitality, a private investment group, unveiled the newly revitalized Hilton Phoenix Airport hotel. The 259-room property at the Phoenix International Airport has undergone a $7.5 million renovation ($29,000 per room) over the last six months. The renovation includes all new guestrooms and bathrooms, corridors, public spaces and a completely new lobby featuring a Starbucks outlet and Hilton Connectivity Zone. The property also had major infrastructure work completed such as... Read more »

Commercial Real Estate & Business News – February 20, 2015

One of the most popular topics of discussion at commercial real estate conferences over the last few months is when will the current rush of U.S. apartment construction slow down -- and recent government numbers and commentary from CoStar economists suggest that the answer may not be any time soon. Although the number of new single-family homes starting construction dropped in January 2015, construction starts on multifamily structures with five or more units increased to 372,000, up more than 12% from December 2014, and 24.5% higher than 12 months ago, even as rental vacancies remained at their lowest level in more than two decades...Read more »
Vacancy rates will tick downward over the course of the year as demand gradually picks up—except in the case of multifamily, clearly the best performing sector. However, storm clouds may blow in from across the ocean, says the National Association of Realtors in its latest quarterly commercial real estate forecast... Read more »
Home prices in the United States posted solid gains in the fourth quarter of 2014, with the majority of metro areas seeing a slightly stronger price growth. This growth was propelled by tight housing supplies, low interest rates, and a strengthening job market, according to the latest quarterly report from the National Association of Realtors...Read more »
SOHO Scottsdale, at 92nd Street and Bahia Drive, is bringing an innovative new concept of live-work-play to north Scottsdale. In early December, the Scottsdale City Council granted approval for the community, which will include approximately 74 home-based business townhomes, an office/retail hub and luxurious loft­style residences above ancillary office/retail. Mayor Jim Lane expressed tremendous enthusiasm for the project. “We are an innovative community and always have been, and we evolve in a healthy way—that’s what we’re seeing here,” he said. “SOHO is innovative, and it is also responsive to the live-work-thrive success stories we have seen around the country"... Read more »
Metro Phoenix's housing market ended 2014 on a high, after several months of flat prices and sagging sales. Valley home sales climbed 29 percent during December, and the area's median home sales price increased 2 percent to $215,000, according to new report report from the W. P. Carey School of Business at Arizona State University... Read more »

Commercial Real Estate & Business News – February 19, 2015

The CRE Bar Is Set High for 2015

As we assess market conditions across the globe today we can hold our heads high and thank last year’s momentum for this year’s potential. A positive foundation has been laid. Economic indicators look good, leasing is robust, new deliveries are set to be 25 percent above last year and prospects for even larger construction volumes are expected for 2016... Read more »

What Renters Want: Affordability Becoming Major Concern

As rents continue to rise across the country, tenants are prioritizing affordability and looking for ways to save. A new survey from suggests that tenants are feeling the crunch of rising rents... Read more »

What the Numbers Say About Arizona's Tech Sector (Hint: It's Good News)

Not a day goes by that I don't look into the eyes of someone who represents the success of Arizona's technology community: a company leader excited about the next "great thing" his company is about to unveil, a researcher whose hard work will make our lives better, a child celebrating the "aha" moment when a STEM lesson takes hold... Read more »

Super Bowl Generates Record Revenues for Hotels

According to Smith Travel Research, revenue per available room (RevPAR), a key indicator of hotel performance, spiked at $324.87 for metro Phoenix on Jan. 31, the day before the Super Bowl. That’s the highest RevPAR ever recorded for metro Phoenix’s hotels for a single day, and represents a 318 percent increase over the same day in 2014... Read more »

Apartments, Community Space Coming to Arts District

An arts-inspired apartment complex coming to McDowell Road plans to turn a sluggish hotel surrounded by museums and theaters into a neighborhood destination. Broadstone Arts District is slated for nearly five acres off McDowell and Alvarado Roads, east of the Phoenix Art Museum and Phoenix Theatre. The two, four-story buildings will include 280 studio, one and two-bedroom apartments for about 400 residents... Read more »

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