Industrial Market Report

Transcription

1 Industrial Market Report Greater Phoenix Q CONTACT NAI HORIZON N 44TH STREET, SUITE 200, PHOENIX, AZ

2 Building Momentum for a Positive 2013 The Phoenix Industrial Market transitioned into 2013 with positive indicators giving an outlook to a sustainable future. After two years of steady rebuilding of the market, not without its pitfalls, Q4 12 comes out solid with a strong positive net absorption, declining vacancy rates, and increased construction. With election year uncertainty behind us, the Phoenix CRE market has the chance to maintain this ground, brightening the mindset towards recovery from the lowest points of the recent recession. Metro Phoenix helped lead the way by adding the rapidly recovering housing market, it is only a matter of time for the positive momentum to impact the commercial market. While 2012 began with a negative net absorption, the market quickly recovered from this stumble, which turned out to be the only negative from the previous year, 2013 appears to continue the momentum of positive net absorption occurring during the last 2 years. Each of the In addition to the prolonged positive absorption run, vacancy continues its steady decline. With a similar vacancy rate not seen in the Phoenix industrial sector since midyear 2008, Q4 12 ended the year with a INDUSTRIAL SPECIALISTS with the lowest vacancy rate of 11.8%, while the Sky Harbor submarket showed the highest rate at 13.4%. Industrial building completions for Q4 12 added just over 2 million SF, more than doubling the delivered square footage for the previous three quarters of the year. The year-end total of 2,894,298 SF is an approximate 1.8 million SF increase of delivered space over One of the most notable of 2012; 3740 S Signal Butte Rd, a 1,328,075 SF facility that is now over 45% occupied. In addition to delivered space, future deliveries look positive with 15 industrial projects totaling 5,375,404 SF While these indicators show signs of the industrial market resurgence, areas for improvement remain. Rental rates held at $0.51 PSF for the third straight quarter. While overall more submarkets reversing their downward trend in rental rates, the Phoenix market still has hurdles to overcome until these rates return to pre-recession levels. While vacancy and absorption seem to show stamina, the rental rates remain stagnant. Adams Joe Cryan Industrial Senior Associate John Filli Richard Foss Vice President Hays joe.cryan@naihorizon.com rick.foss@naihorizon.com Page 2

3 In addition to the prolonged positive absorption run, vacancy continues its steady decline. As economic conditions settle throughout 2013, Historical Industrial Rental Rate (nnn) optimistic economic trends viewed in 2012 could begin to trickle down and show their effect on the CRE market. The largest lease transaction recorded in Q4 12 was a 164,486 SF lease at 2550 N Nevada St in Chandler for the i/o Data Center. The largest sale transactions for the quarter were all a part of larger portfolio sales; W Buckeye was part of a $178 million, 13 state, 20 property Brennan Investment Group, while both 4201 N 45th Ave and 2555 N Nevada St were part of a $76 million, 3 property sale leaseback sold by the Hensley Beverage Company to Angelo, Gordon & Co., a privately-held registered investment advisor. Economic Outlook slightly improve economically and recover from halted business consumer spending is forecasted to inch upwards as things through While the impending economic Armageddon has been avoided for now and may brighten the short term outlook, the looming unknown may strike again as the March deadline for federal budget sequestrations approaches. The second continue to improve from the years of struggle that appear to be behind us. Rate $0.55 $0.50 $0.45 $0.40 4Q10 2Q11 4Q11 2Q12 4Q12 On a regional level, Arizona began 2012 with an unemployment rate of 8.7%, above the US rate of 8.3%. As of November, Arizona caught up with the US average and ended the year at 7.8%. This marks a four-year low for the state, which brought in 22,700 new jobs in November. Nationally, the US expects to see around 2 million jobs added in 2013, up slightly from the 1.84 million gained in While this increase shows sustainment, the pace of job creation will statistics to improve. Another positive throughout 2012 and continuing into the new year is Arizona s changing housing market. Phoenix area home prices are up 34% year-over-year with new home sales increasing by a staggering 85%. In addition to the growth, the plaguing effects of foreclosure seem to be improving. As continued on next page Chad Neppl Patrick Sheehan Isy Sonabend Mark Wilcke Tom Young Industrial Vice President, SIOR chad.neppl@naihorizon.com patrick.sheehan@naihorizon.com isy.sonabend@naihorizon.com mark.wilcke@naihorizon.com tom.young@naihorizon.com Page 3

4 Q4 12 Industrial Market Indicators Vacancy Net Absorption Construction Asking Rents FLAT of November, there were 34% less completed foreclosures year-over-year, and a 43% drop in overall supply of distressed properties. While still low in comparison to levels, residential permitting was up more than 60% in That trend is likely to continue into With construction and housing being the pulse of the Valley, the improving residential market provides a foundation for the commercial real estate toward a full recovery. Another factor that could help brighten the long term horizon for the Phoenix CRE market is the recent tax changes in California. A combination of increased income taxes, state sales taxes and multistate business taxes have created the perfect environment for businesses to further consider the Valley of the Sun as the next smart move. Arizona has spent the last few years making strong efforts to improve the business environment by lowering capital gains and corporate taxes, initiating business-friendly policies, and creating programs to support new or expanding businesses to excel in the Valley. GPEC (Greater Phoenix Economic Council) has created a California 100 program to bring interested CEOs to the city effort, combined with a market on the verge of full rebound, adds optimism to a year full of possibilities. Industrial Vacancy Rates Industrial Leasing Activity 18% # of Deals % % 12% % 500 8% 2Q11 4Q11 2Q12 4Q Q10 2Q11 4Q11 2Q12 4Q12 Economic Indicators Consumer Price Index Phoenix Metro Unemployment 30-Year Fixed Mortgage properties are analyzed. There were no stipulations on square footage, all sizes were included. Some information contained herein has been obtained from third party sources deemed reliable but has not been independently Page 4

5 2012 Q4 INDUSTRIAL MARKET BY THE NUMBERS Submarket Clusters Total RBA Direct Vacant SF Sublet Vacant SF Total Vacant SF Direct Vacant % Sublet Vacant % Total Vacant % Total Net Absorption RBA Delivered RBA Under Const. Average Rental Rate Sky Harbor Northeast Valley Northwest Valley Southeast Valley Southwest Valley Total Submarket Clusters 1 2 INDUSTRIAL SUBMARKETS Northwest Valley 1 2 Deer Valley/Pinnacle Peak, Glendale, Grand Avenue, N Glendale/Sun City Northeast Valley Central Phoenix, Scottsdale Airpark, Scottsdale/Salt River 3 Southwest Valley Goodyear, SW N of Buckeye Rd Sky Harbor North Airport, S Airport N of Roeser, S Airport S of Roeser, SC N of Salt River, SC S of Salt River Southeast Valley Chandler Airport, Chandler, Chandler N/ Gilbert, Falcon Field/Apache Junction, Mesa, Tempe E, Tempe NW, Tempe SW Page 5

6 Top Lease Transactions Q N Nevada St, Chandler Submarket: Chandler N/Gilbert Tenant: i/o Data Center Lease Type: Move-in Square Feet: 145,540 Bldg. Type: Manufacturing Buckeye Logistics Center 6825 W Buckeye Rd, Phoenix Submarket: Tolleson Tenant: Mor Furniture for Less Lease Type: Move-in Square Feet: 106,150 Bldg. Type: Distribution Papago Distribution Center 4802 W Polk St, Phoenix Submarket: SW N of Buckeye Tenant: Rugby Architectural Building Products Lease Type: Move-in Square Feet: 67,193 Bldg.Type: Distribution Top Sale Transactions Q N 45th Ave Phoenix, AZ Submarket: Grand Avenue Sale Date: Price: $47,000,000 Price PSF: $ Square Feet: 296,000 Bldg. Type: Distribution 2555 N Nevada St Chandler, AZ Submarket: Chandler N/Gilbert Sale Date: Price: $26,500,000 Price PSF: $ Square Feet: 231,167 Bldg Type: Distribution W Buckeye Rd Phoenix, AZ Submarket: Tolleson Sale Date: Price: $20,981,989 Price PSF: $ Square Feet: 171,332 Bldg. Type: Light Distribution REPORT PREPARED BY: Marissa Russo Marketing & Communications Manager GIS Specialist marissa.russo@naihorizon.com Andrew Starkman Marketing / Research andrew.starkman@naihorizon.com Connect with us online! NAI Horizon stays active on most social networking outlets including: Facebook, Twitter, LinkedIn, and our own blog. Like us, follow us, and subscribe to our RSS feed for continual updates on the CRE marketplace both locally and nationally and to stay up to date with our company into the future. Stephanie Van Dyken Marketing / Research stephanie.vandyken@naihorizon.com 2944 N 44th Street, Suite 200 Phoenix, AZ