Phoenix Economic Outlook 2007:
Featuring Ron Barness, featured presented about the Phoenix commercial market
Growth, commercial real estate prop up economy; Could ease slowdown in housing, employment
By: Catherine Reagor and Chad Graham
The Arizona Republic
Sept. 22, 2006 12:00 AM
How is the Valley’s economy doing?
Jobs and residential real estate growth have roughly returned to normal. Still, it can feel like a slump because last year was so unusually frenzied.
The state’s strong suits continue to be population growth and capital spending, especially in the now-booming commercial real estate market. If those two categories can pick up the slack, there could be less chance of a mild recession next year.
Here are other findings from Thursday’s 2007 Economic Outlook sponsored by the Greater Phoenix Chamber of Commerce:
Economy
“The Valley’s economy is in the seventh-inning stretch. It’s late in the game. There’s a recession in the future, but not now,” said Elliott Pollack of the economic consulting firm Elliott D. Pollack & Co.
• Almost 80,000 new jobs are expected to be created Valley-wide in 2006, and 60,000 in 2007.
• As many as 130,000 people will move to metropolitan Phoenix this year.
• Consumer and construction spending is expected to slow.
• U.S. residential spending compared with the overall gross domestic product is the highest it has been since the 1940s.
Housing
“I thought we would have seen the housing market stabilize by now,” said Valley housing analyst RL Brown. “Now home builders have a surplus and no lines at their sales offices. Reality set in for them a month ago.”
• The typical price of a new Valley home climbed from $225,000 to $300,000 last year.
• Single-family housing permits were down 45 percent in August compared with a year ago.
• For the first eight months of 2006, home permits are down 23 percent from 2005’s record pace.
• There are 47,000 homes for sale Valley-wide, more than double the listings from a year ago.
Commercial real estate
“We need more industrial space. Until we get it, the Valley will lose more jobs as companies go where there’s space,” said Pete Bolton, senior managing director of CB Richard Ellis. “We won’t overbuild. Banks and the commercial market learned their lessons last time.”
• More than 8 million square feet of warehouse space is under construction in metropolitan Phoenix. Half of that is spec space without a signed tenant to move into it.
• About 3 million square feet of office space will go up Valley-wide this year.
Retail
“It wasn’t long ago that high-end East Coast retailers weren’t interested in Phoenix,” said Ron Barness of Retail Brokers Inc. “The opposite is true now.”
• The Valley’s retail vacancy is 5 percent, lower than it’s ever been.
• Currently, there’s 6.6 million square feet of retail space under construction in metropolitan Phoenix.