Updated October 9, 2017

Based on Data Available Third Quarter, 2017

A First Glance at 2019

By Elliott Pollack
Greater Phoenix Blue Chip
Third Quarter, 2017

    This quarter’s Great Phoenix Blue Chip gives us our first look at 2019. The results suggest that the recovery in single-family housing will continue. The string of year over year increases that started in 2012 is expected to last at least through 2019. Multifamily (apartment) permit activity is expected to be a little slower in 2018 and 2019 than in 2017. Apartment absorption is expected to follow the same pattern. The result is that apartment vacancies are expected to be about flat in 2017-2019.

    Spec office construction is anticipated to be up about 11% in 2018 and is projected to be up another 40% in 2019. Office absorption is expected to be up in 2018 before flattening out in 2019. The result is that office vacancy rates should only decline modestly over the next few years to about 15% at year-end 2019.

    Industrial construction, absorption, and vacancies are expected to remain relatively flat in the 2017-2019 time period while retail spec construction is projected to be up in 2017 and flat in 2018 and 2019. Absorption of retail space, on the other hand, is expected to be flat in 2018-2019. Vacancy rates are anticipated to stay about the same during that time period at levels that historically have been considered high.

    The surprise here is that the panel is not forecasting the usual decline in vacancy rates to levels that lead to a boom. That has been the historic norm in economic up cycles. This is unusual. While the slower than expected rate of growth in population in the cycle has resulted in it taking longer to absorb excess commercial space, the panel is suggesting that we are about to enter a period of unusual stability in both construction and absorption. Real estate activity is inherently cyclical. The slower rate of growth does not change that.

    That being said, the outlook for both residential and commercial construction remains positive. No boom is on the horizon. But, a bust is not on the horizon either. If the panel is correct, we are in for a period of stability in virtually all sectors. The single-family outlook remains positive. The demographics of apartments remain exceptional. The office and industrial outlook also is positive. And retail, while under greater stress due to the shift to internet shopping will still be acceptable in the Greater Phoenix area due to continued, although muted, population growth. Unless the national economy does considerable worse than anticipated, local construction markets will remain a plus.


Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service2220069006.26,200.0
Belfiore Real Estate Consulting21200
CBRE2150092005.56,300.0
Colliers International2200072005.96,600.0
CRA LLC2200070006.07,500.0
Cromford Report207508200
Cushman & Wakefield212009000
Elliott D. Pollack & Co.2100080005.57,000.0
Griffin Consulting2150070006.06,100.0
ROI Properties2100055007.04,500.0
Southwest Growth Partners2250065005.95,500.0
U of A Eller College211469591
CONSENSUS2150076456.06,213.0
Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service2590066006.86,000.0
Belfiore Real Estate Consulting25300
CBRE2300088005.05,800.0
Colliers International2800065006.56,000.0
CRA LLC2600070006.06,000.0
Cromford Report228007000
Cushman & Wakefield25300
Elliott D. Pollack & Co.2350075005.87,500.0
Griffin Consulting2450067506.26,500.0
ROI Properties2300037007.23,000.0
Southwest Growth Partners2400058006.54,200.0
U of A Eller College230739175
CONSENSUS2453168836.35,625.0
Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service2650068006.76,300.0
Belfiore Real Estate Consulting26000
CBRE2500085005.06,000.0
Colliers International3300075006.76,500.0
CRA LLC3000065005.55,500.0
Cromford Report254007000
Cushman & Wakefield26000
Elliott D. Pollack & Co.2600070006.05,500.0
Griffin Consulting2575065006.06,600.0
ROI Properties2200040007.52,000.0
Southwest Growth Partners
U of A Eller College249778692
CONSENSUS2642169446.25,486.0
Residential Forecast
2017 2018 2019
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) Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service2220069006.26,200.02590066006.86,000.02650068006.76,300.0
Belfiore Real Estate Consulting212002530026000
CBRE2150092005.56,300.02300088005.05,800.02500085005.06,000.0
Colliers International2200072005.96,600.02800065006.56,000.03300075006.76,500.0
CRA LLC2200070006.07,500.02600070006.06,000.03000065005.55,500.0
Cromford Report207508200228007000254007000
Cushman & Wakefield2120090002530026000
Elliott D. Pollack & Co.2100080005.57,000.02350075005.87,500.02600070006.05,500.0
Griffin Consulting2150070006.06,100.02450067506.26,500.02575065006.06,600.0
ROI Properties2100055007.04,500.02300037007.23,000.02200040007.52,000.0
Southwest Growth Partners2250065005.95,500.02400058006.54,200.0
U of A Eller College211469591230739175249778692
CONSENSUS2150076456.06,213.02453168836.35,625.02642169446.25,486.0
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 (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption
Arizona Public Service*1.5014.702.80
CBRE0.6815.202.30
Colliers International*2.2016.002.40
Cushman & Wakefield*17.101.04
Elliott D. Pollack & Co.1.8016.002.50
Lee & Associates2.2018.002.80
ROI Properties*2.0015.002.80
CONSENSUS1.7316.002.38
Office Forecast (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption
Arizona Public Service*3.0014.003.70
CBRE0.4515.802.40
Colliers International*2.4015.303.00
Cushman & Wakefield*19.000.68
Elliott D. Pollack & Co.2.5015.003.20
Lee & Associates1.5016.702.50
ROI Properties*1.7014.603.00
CONSENSUS1.9315.802.64
Office Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service*3.2013.104.00
CBRE1.0016.902.10
Colliers International*3.0014.803.40
Cushman & Wakefield*17.700.34
Elliott D. Pollack & Co.3.5014.503.00
Lee & Associates
ROI Properties*3.0014.003.20
CONSENSUS2.7415.202.67
Office Forecast (Millions of Sq. Ft.)
2017 2018 2019
Organization Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption
Arizona Public Service*1.5014.702.803.0014.003.703.2013.104.00
CBRE0.6815.202.300.4515.802.401.0016.902.10
Colliers International*2.2016.002.402.4015.303.003.0014.803.40
Cushman & Wakefield*17.101.0419.000.6817.700.34
Elliott D. Pollack & Co.1.8016.002.502.5015.003.203.5014.503.00
Lee & Associates2.2018.002.801.5016.702.50
ROI Properties*2.0015.002.801.7014.603.003.0014.003.20
CONSENSUS1.7316.002.381.9315.802.642.7415.202.67
Actuals From CBRE (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption

* 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 (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption (Units)
No data available for the selected filter
Retail Forecast (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption (Units)
No data available for the selected filter
Retail Forecast
Organization Construction Vacancy (Year End %) Absorption (Units)
No data available for the selected filter
Retail Forecast (Millions of Sq. Ft.)
2017 2018 2019
Organization Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption
Actuals From CBRE (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption (Units)
No data available for the selected filter


Industrial Forecast (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption
Arizona Public Service4.508.706.60
CBRE*5.907.108.20
Colliers International**7.109.408.40
Cusham & Wakefield*3.578.905.98
Lee & Associates**4.008.107.00
ROI Properties2.509.205.00
CONSENSUS4.608.606.86
Industrial Forecast (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption
Arizona Public Service5.807.906.90
CBRE*4.809.006.50
Colliers International**5.008.706.80
Cusham & Wakefield*2.118.604.17
Lee & Associates**4.407.507.30
ROI Properties3.259.406.00
CONSENSUS4.238.506.28
Industrial Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service6.007.607.50
CBRE*5.5010.805.60
Colliers International**6.207.708.50
Cusham & Wakefield*2.468.504.00
Lee & Associates**
ROI Properties3.009.605.50
CONSENSUS4.638.806.22
Industrial Forecast (Millions of Sq. Ft.)
2017 2018 2019
Organization Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption
Arizona Public Service4.508.706.605.807.906.906.007.607.50
CBRE*5.907.108.204.809.006.505.5010.805.60
Colliers International**7.109.408.405.008.706.806.207.708.50
Cusham & Wakefield*3.578.905.982.118.604.172.468.504.00
Lee & Associates**4.008.107.004.407.507.30
ROI Properties2.509.205.003.259.406.003.009.605.50
CONSENSUS4.608.606.864.238.506.284.638.806.22
Actuals From CBRE (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption

* All space over 5,000 sq. ft.

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

2016 Actuals3.328.009.50
2015 Actuals3.3510.107.05