Updated April 7, 2017

Based on Data Available First Quarter, 2017

Greater Phoenix Real Estate Market Continues to Improve

By Elliott Pollack
Greater Phoenix Blue Chip
First Quarter, 2017

    The general picture for real estate in Greater Phoenix remained about the same in the first quarter of 2017 as it was in the last quarter of 2016. Residential, single family permits are expected to be up about 21% to 21,900 units in 2017 and increase again to about 24,700 units in 2018. This compares to about 18,000 units in 2016 and about 15,900 units in 2015. If this comes to fruition, the single family market will have grown by over 50% between 2015 and 2018. Apartment permits are forecast to stay fairly steady in 2017 and 2018 at about 6,500 units permitted each year. Absorption of apartments is likely to stay steady as well. Overall, apartment vacancies are projected to be about flat in 2017 and 2018.

    The office market continues to improve. Vacancy rates in office are expected to continue to decline. At year-end 2015, vacancy rates were 19.4%. At year-end 2016, they were estimated to be 17.4%. By year-end 2017 and 2018, vacancies are projected to be 16.1% and 15.4%, respectively. Spec construction is expected to be 1.7 million square feet in 2017 and 2.1 million in 2018, while absorption is on track to approach 3.0 million square feet in 2017 and exceed 3.0 million in 2018.

    While the retail market is likely to continue to struggle, overall movement is in a positive direction. Vacancy rates, which were 8.9% at year-end 2016, are expected to remain at about 9.0% at year-end 2017 and then decline slightly to 8.8% at year-end 2018. At least some modest level of spec construction in retail is expected in 2017 and 2018. This compares to virtually no spec construction in 2015 and 2016. Absorption of retail space is projected to increase in 2017 and 2018 from 2016 levels. But, the level of absorption will remain anemic by historic standards.

    The industrial market, according to the panel, will remain strong. Vacancy rates should continue to decline from over 10% at year-end 2015 to about 8.4% by year-end 2018. Spec construction is expected to continue to increase over this year and next, as will absorption. Overall, the pattern of recovery in real estate markets is projected to continue over the 2017 and 2018 forecast period.


Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service2320069007.07,000.0
Belfiore Real Estate Consulting21200
CBRE2000065004.96,400.0
Colliers International2500068006.05,800.0
CRA LLC2400060006.06,000.0
Cromford Report195008200
Cushman & Wakefield1900075005.28,000.0
Elliott D. Pollack & Co.1950060005.78,000.0
Griffin Consulting2225066506.16,050.0
ROI Properties2310050007.82,500.0
Southwest Growth Partners2250055005.95,200.0
U of A, Eller College231007484
CONSENSUS2186365946.16,106.0
Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service3180075007.07,200.0
Belfiore Real Estate Consulting25300
CBRE2200062004.95,900.0
Colliers International3000065006.55,000.0
CRA LLC2600065006.06,000.0
Cromford Report215007000
Cushman & Wakefield1950070005.07,500.0
Elliott D. Pollack & Co.2150080005.78,000.0
Griffin Consulting2475065006.25,550.0
ROI Properties2500037008.02,000.0
Southwest Growth Partners2400035006.52,500.0
U of A, Eller College249278309
CONSENSUS2469064286.25,517.0
Residential Forecast
2017 2018
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units) Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service2320069007.07,000.03180075007.07,200.0
Belfiore Real Estate Consulting2120025300
CBRE2000065004.96,400.02200062004.95,900.0
Colliers International2500068006.05,800.03000065006.55,000.0
CRA LLC2400060006.06,000.02600065006.06,000.0
Cromford Report195008200215007000
Cushman & Wakefield1900075005.28,000.01950070005.07,500.0
Elliott D. Pollack & Co.1950060005.78,000.02150080005.78,000.0
Griffin Consulting2225066506.16,050.02475065006.25,550.0
ROI Properties2310050007.82,500.02500037008.02,000.0
Southwest Growth Partners2250055005.95,200.02400035006.52,500.0
U of A, Eller College231007484249278309
CONSENSUS2186365946.16,106.02469064286.25,517.0
Actuals From Phoenix Housing Market Letter and CBRE
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
2016 Actuals1801580225.25,731.0
2015 Actuals1590227065.38,730.0



Office Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service*1.5015.703.00
CBRE1.7016.003.00
Colliers International*2.1014.703.70
Cushman & Wakefield*1.4017.202.80
Elliott D. Pollack & Co.2.0016.503.00
Lee & Associates2.0017.802.40
ROI Properties1.2015.002.80
CONSENSUS1.7016.102.96
Office Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service*3.0015.404.00
CBRE1.3015.502.50
Colliers International*2.8013.604.00
Cushman & Wakefield*1.0017.001.80
Elliott D. Pollack & Co.2.5015.503.50
Lee & Associates1.8016.302.50
ROI Properties2.5014.502.80
CONSENSUS2.1315.403.01
Office Forecast
2017 2018
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.) Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service*1.5015.703.003.0015.404.00
CBRE1.7016.003.001.3015.502.50
Colliers International*2.1014.703.702.8013.604.00
Cushman & Wakefield*1.4017.202.801.0017.001.80
Elliott D. Pollack & Co.2.0016.503.002.5015.503.50
Lee & Associates2.0017.802.401.8016.302.50
ROI Properties1.2015.002.802.5014.502.80
CONSENSUS1.7016.102.962.1315.403.01
Actuals From CBRE
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)

* All space over 10,000 sq. ft.

** All space over 20,000 sq. ft.

2016 Actuals0.6817.403.22
2015 Actuals2.1519.403.70


Retail Forecast
Organization Construction Vacancy (Year End %) Absorption (Units)
Arizona Public Service1.208.501.80
CBRE0.158.501.40
Colliers International1.509.002.10
Cusham & Wakefield0.6010.201.20
ROI Properties0.709.002.15
CONSENSUS0.839.001.73
Retail Forecast
Organization Construction Vacancy (Year End %) Absorption (Units)
Arizona Public Service1.308.102.00
CBRE0.208.001.40
Colliers International1.808.302.50
Cusham & Wakefield0.4010.200.40
ROI Properties0.209.301.70
CONSENSUS0.788.801.60
Retail Forecast
2017 2018
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.) Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service1.208.501.801.308.102.00
CBRE0.158.501.400.208.001.40
Colliers International1.509.002.101.808.302.50
Cusham & Wakefield0.6010.201.200.4010.200.40
ROI Properties0.709.002.150.209.301.70
CONSENSUS0.839.001.730.788.801.60
Actuals From CBRE
Organization Construction Vacancy (Year End %) Absorption (Units)
2016 Actuals0.008.901.32
2015 Actuals0.009.101.15


Industrial Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service**4.508.905.00
CBRE*5.407.506.00
Colliers International**6.509.906.80
Cusham & Wakefield**3.008.407.80
Lee & Associates**4.008.906.50
ROI Properties2.509.705.00
CONSENSUS-TOTAL SPACE4.328.906.18
Industrial Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service**5.808.406.70
CBRE*2.007.007.00
Colliers International**8.009.308.70
Cusham & Wakefield**2.708.507.10
Lee & Associates**4.407.707.30
ROI Properties3.259.406.00
CONSENSUS-TOTAL SPACE4.368.407.13
Industrial Forecast
2017 2018
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.) Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service**4.508.905.005.808.406.70
CBRE*5.407.506.002.007.007.00
Colliers International**6.509.906.808.009.308.70
Cusham & Wakefield**3.008.407.802.708.507.10
Lee & Associates**4.008.906.504.407.707.30
ROI Properties2.509.705.003.259.406.00
CONSENSUS-TOTAL SPACE4.328.906.184.368.407.13
Actuals From CBRE
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)

* All space over 5,000 sq. ft.

** All space over 10,000 sq. ft.

2016 Actuals3.328.009.50
2015 Actuals3.3510.107.05