An auditorium, full of real estate and affiliate professionals, at the Phoenician Resort, anxiously awaited to hear the 2014 forecast for the real estate industry in Phoenix at the Real Estate Outlook seminar on January 9, 2014, organized by the Phoenix Business Journal. The consensus was there was no consensus; whether 2014 will be a great year in the Phoenix metropolitan area depends on several factors described by the invited panel of experts.
The panel consisted of men representing top developers: Pete Bolton (Newmark Grubb Knight Frank), John DiVail (Liberty Property Trust), Tim Johnson (JBA Consulting Engineers), Keaton Merrell (Legacy Capital Advisors), Matt Mooney (Parkway Properties Inc), Jeremy Schoenfelder (PhoenixMart), and Jim Swanson (Kitchell). Additional partners for the event included NAIOP and Merestone.
The most positive projections involved multi-family sales, niche retail and healthcare-related construction, and included that Phoenix has moved up in national polls of the best places to invest, and that the new Apple project in Mesa helps Phoenix image as a place to relocate. The new PhoenixMart project, which will focus on international commerce development, was highlighted.
But when asked by moderator Business Journal Editor Ilana Lowery for one word to sum up the outlook for 2014, the responses included “elusive,” “spastic,” and an unenthusiastic “recovering” and “stabilizing.”
While the commercial recovery is steady and above national growth rates, the recovery has been slow, and large leases are decreasing. Phoenix’s image as best place to put your money is improving, but it is still only #25 on the national list of cities. The Central Avenue business corridor faces challenges of aging buildings, not designed for modern demands of technology and parking. Retail malls will also continue to suffer from the decreasing presence of, or demand for, large anchor stores (e.g., the closure of Fiesta Mall’s Macy’s). Even the multi-family boom is dependent on location, and threatened by the temptation to overbuild.
The panel debated issues, like the Apple being more beneficial than State Farm or whether solar and other environmental renovations make sense financially. But Matt Moody’s one-word prediction—“bifurcated”—tells us we will have to wait and see if, by this summer, the Phoenix real estate market will be as hot as its temperatures this summer.