The Phoenix-Scottsdale-Mesa commercial real estate market has been strong in recent years, with high demand and low vacancy rates for office, industrial, and retail space.
This has been driven by population and job growth, a favorable business climate, and increased investment in the region. The industrial sector has been particularly strong due to the growth of e-commerce and logistics.
However, the COVID-19 pandemic has had some impact on the market, with some businesses experiencing financial difficulties and reducing their space requirements. This has led to an increase in sublease space and a slight uptick in vacancy rates. Additionally, some changes in business and consumer behavior, such as increased remote work and online shopping, may have lasting impacts on the demand for certain types of commercial real estate.
Looking ahead to 2nd half of 2023 and 2024, the fate of the Phoenix-Scottsdale-Mesa commercial real estate market will depend on various factors, including the pace of the economic recovery, changes in business and consumer behavior, and shifts in the political and regulatory environment. Some experts predict that the market will continue to grow in the coming years, while others like Charlie Munger, Morgan Stanly, Blackrock, and others caution that there may be some huge challenges and uncertainties ahead.
Overall, it is important to keep in mind that the commercial real estate market can be complex and dynamic, and that market conditions can vary by location, property type, and other factors. If you are considering investing or selling in the Phoenix-Scottsdale-Mesa commercial real estate market in 2023/2024, it is a good idea to do your own research and consult with local experts to gain a deeper understanding of the market conditions and the risks and opportunities involved.
Word on the street:
- According to an article by Crexi Insights, Phoenix was among the top targets for commercial real estate investment last year, with all commercial real estate sectors reporting exceptional performance. Going into 2022, industry experts expect the Phoenix commercial real estate to continue outperforming, with industrial and multifamily leading the way.
- An article by AZ Big Media states that despite declarations that retail is dead, the sector is gaining momentum. Consumer spending increased 18.6% at the end of September compared with January.
- Another article by AZ Big Media states that Phoenix is one of commercial real estate’s hottest markets and that going into 2023, it is expected to continue outperforming.
- According to an article by MSN, Charlie Munger believes there is trouble ahead for the U.S. commercial property market. He reportedly told the Financial Times that U.S. banks are packed with “bad loans” that will be vulnerable as “bad times come” and property prices fall
- According to an article by AZ Big Media, Phoenix’s commercial real estate outlook for multifamily is positive. Phoenix is projected to welcome 1.9 million new residents over the next 20 years —requiring almost 700,000 new housing units.
- Commercial real estate may suffer a worse crash than 2008, warns Morgan Stanley Wealth Management. Prices could drop up to 40% from their peak as hybrid working and higher interest rates bite. Landlords, various lenders, and business communities all stand to lose from the downturn.