Here’s How Experts See the Outlook for Commercial Real Estate in Arizona


Real estate is booming in Arizona. But how long can it last? AZRE spoke directly to the experts for their opinion on the outlook for commercial real estate in Arizona.

Commercial Real Estate Professionals (CREs) gathered at The Clayton House in Scottsdale on August 5 to hear from industry experts at the 7th Annual AZRE Forum. Panelists provided in-depth analysis of the industrial, office, retail and multi-family housing sectors; discussed the impacts of COVID-19; and predict what might happen in the market in the future.

READ ALSO: How can Arizona cope with the increasing demand for labor in the construction industry?

“Our panelists are among the most knowledgeable and accomplished people in their field. Bringing them all together to discuss the outlook for commercial real estate gives us insight that is not available anywhere else, ”said Michael Gossie, editor at AZ Big Media, who hosted the event.

The sponsors of the AZRE Forum panel were NAI Horizon, MacQueen & Gottlieb, and Rise48 Equity. The drink sponsor of the AZRE Forum was Corporate banking and trust and the dessert sponsor was the City of Tempé. The audio sponsor was Phoenix Audiovisual Technology.

Here is the outlook for commercial real estate and some key takeaways from the three panels.


Opening the event was the Broker Panel, which provided an up-to-date overview of the current state of CRE in Greater Phoenix. The status quo indicates a positive trend for the state’s industrial products.


Bob Mulhern, Necklaces – Moderator

Boston Chauthani, Taylor Street Councilors

Cliff David, Marcus & Millichap / IPA

Laurel Lewis, NAI Horizon

Tony Lydon, JLL

Rob Martensen, Necklaces

“We are fortunate to live in Arizona where the regulations and taxation are reasonable. For this reason, we are one of the few states to manufacture products, ”comments Tony Lydon, Managing Director of JLL, referring to the influx of manufacturing companies that have established themselves in Arizona.

(Photo by Bruce Andersen, AZ Big Media)

West of the Colorado River, the Inland Empire region of Southern California is known to be an industrial powerhouse. Products shipped from Asia land at ports in California. The Greater Phoenix’s proximity to Inland Empire, however, makes it an attractive option for distributors.

“Inland Empire will always be king because 20 million people live in Southern California,” said Rob Martnesen, executive vice president of Colliers. “But now, instead of just having a giant building in the Inland Empire and distributing it from there, the companies are starting to say, ‘Maybe we’re leaving all we can in the Inland Empire. and let’s put the rest in Phoenix. “

Commenting on the strength of the market, Cliff David, executive general manager of the Real Estate Advice division of Marcus & Millichap, notes: “At the end of June, there were approximately $ 5.3 billion in sales. It’s reasonable to say we’ll be making $ 11 billion to $ 12 billion by the end of the year.

Even before the effects of the pandemic set in, some predicted the death of retailing due to the convenience and ubiquity of Amazon. But Boston Chauthani, vice president of Taylor Street Advisors, does not hear the death knell for retail. “To a certain extent, parts of the market are going to die and change. Big box stores are going to downsize, ”he said. “A lot of the headlines focus on deteriorating malls, but small multi-tenant malls perform extremely well. “

The COVID-19 impact panel. (Photo by Mike Mertes, AZ Big Media)


Like any industry, the COVID-19 pandemic has had profound effects on CRE. The hospitality sector has been hit particularly hard due to door-to-door orders and, after businesses reopened, suspicious consumers. Some planned projects were abandoned due to the uncertainty caused by the crisis.


Patrick MacQueen, MacQueen & Gottlieb – Moderator

Ben Darwin, CliftonLarsonAllen

André Geier, Layton Construction

Derek Flottum, Irgenes

Kimberly Rollins, Commercial Properties, Inc./CORFAC International

(Photo by Bruce Andersen, AZ Big Media)

Yet people have found a way to keep doing business. “Small tenants seemed to stay out of the office for as little time as possible. But our large listed tenants have still not returned ”, remarks Derek Flottum, vice-president of development at Irgens.

Looking at the multi-family sector, Kimberly Rollins, Senior Vice President of CPI, notes that current conditions are very different from 2008. “We thought we were heading into another 2008-type recession, but it didn’t come to pass. not produced, ”she said. “In fact, the opposite has happened. A big difference this time is that people have money and they are not over-indebted.

Speaking to the construction industry, Andrew Geier, executive vice president of Layton Construction, said business had exploded during the pandemic. However, the material costs have skyrocketed. “When COVID increased, factories slowed down because they thought demand was going to disappear. As a result, the prices of all materials have increased, as well as the waiting times. Before, it took 10 to 12 weeks to get steel beams. Now it takes 10 to 12 months.

The Industry Outlook Panel. (Photo by Mike Mertes, AZ Big Media)


Overall, panelists believe the Greater Phoenix has prepared for a bright future thanks to a favorable business environment, well-built infrastructure, and a destination for transplants across the country.


Suzanne Kinney, NAIOP – Moderator

Jamie Godwin, Stevens-Leinweber

Ben Gottlieb, MacQueen & Gottlieb

John Kinser, Corporate bank

Kristen Stephenson, GPEC

But challenges loom on the horizon, due to an insufficient labor pool under construction. Without enough workers on a job site, lead times start to increase, which increases costs.

Nonetheless, organizations such as the Greater Phoenix Economic Council (GPEC) are working to keep investments in the state. “GPEC has been a great success over the past year, bringing 10,000 jobs to the Valley. There has been a change in what’s to come. In the past, it was half industrial and half office automation, but now it’s closer to two-thirds of manufacturing, ”notes Kristen Stephenson, senior vice president of research and analysis at GPEC.

Looking ahead, Jamie Godwin, owner and president of Stevens-Leinweber Construction, adds: market. I think we will return to the same level of activity as before the pandemic by the end of next year. “

Closing the event, Stephenson predicts, “The Greater Phoenix is ​​going to become the semiconductor and electronic vehicle hub of the country, if not the world.”

The 7th Annual AZRE Forum. (Photo by Bruce Andersen, AZ Big Media)

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