PHOENIX ON TRACK FOR A FULL RECOVERY BY THE END OF THE YEAR%>
Published on Wednesday, January 13, 2021
Strong fundamentals, including job growth, population growth and affordability, are expediting recovery in the Southwest market. %>
Phoenix is already in recovery mode, and a new report from Avison Young predicts a full recovery by the end of the year. Strong fundamentals—including job growth, population growth and affordability—are expediting the recovery and highlighting the market’s newfound resiliency.
“This downturn is not like others as it wasn’t a crash in real estate due to overbuilding or bad loans,” Mark Seale, principal and director of brokerage services at Avison Young, tells GlobeSt.com. “Phoenix is still one of the top markets in nation for job and population growth, affordable land, and housing. These fundamentals are making Phoenix resilient.”
These fundamentals aren’t new. Phoenix was already a top growth market before the pandemic, but the pandemic has accelerated the trend. “The strong market fundamentals and momentum happening prior to 2020 is continuing in the greater Phoenix region,” says Seale. “The population inflows here are tremendous despite the pandemic. We continue to have an influx of people choosing to relocate to Arizona, which will positively affect all sectors including retail and construction.”
The office market has become Phoenix’s greatest strength. “We believe we will see a robust recovery is because we have a strong suburban office market that is evenly distributed throughout the Valley,” says Seale. “A lot of companies are looking for space away from the downtown/urban markets and are seeking low-rise product, which is abundant in outlying areas that are still convenient to the freeways systems. This is ironic because what was considered a weakness in our market—suburban low-rise offices—is now an advantage coming out of the pandemic.”
Phoenix is not only on track to hit a full recovery, but Seale also expects continued growth. “It still has the ability to grow as well because we have a lot of land development opportunities. This region also has many planned projects that are shovel-ready,” he says. “Developers can react very quickly concerning new site selection requirements for users.”
While leisure and retail assets have taken a hit, pent up demand will ensure a swift recovery in these sectors as well, as soon as it is safe to return to life as normal. “With the vaccine and people getting tired of being isolated at home and doing Zoom meetings, the feedback we are getting is that people are anxious to get back to the office,” says Seale.