Updated July 2, 2018

Based on Data Available First Quarter, 2018

Expectations Still High

By Elliott Pollack
Greater Phoenix Blue Chip
Second Quarter, 2018

    If you’ve been happy about the optimism expressed by the panel over the past year, you will continue to be happy. The panel’s forecast remains about the same as it has been over the past few surveys. This is true despite the threat of rising interest rates and a trade war (notice that the media has not defined war). The panel’s expectations suggest the following:
• Single family permit activity will continue to expand.
• Apartment permits will stay near current levels, despite excess capacity in certain rental price ranges in certain areas of Greater Phoenix.
• Apartment absorption will continue to remain strong.
• Apartment vacancies will rise only modestly.
• The office market will remain relatively strong.
• Office vacancies will decline modestly.
• The industrial market remains strong.
• Industrial vacancies will rise only modestly.
• Retail construction, while expanding, will remain weak by historic standards.
• Rental vacancies will rise.

    Current data coming out of the new single family market suggests that the panel is in the ball park with its forecast. Permits were up 14.7% so far this year. The very strong job market and higher wages combined with millennials who are aging, finding good jobs and paying off student loan debt suggest that the single family market in Greater Phoenix will continue to do well.

    As for apartments, there seems to be strong demand in all sectors. But, the supply that is being delivered and planned is mostly in the upper end of the market, concentrated in certain geographic areas of the Greater Phoenix metro area. These prime locations have become very competitive. Yet, the outlook for the mid-market (worker housing) is very strong. Despite this, few apartment builders have figured out how to meet the demand created by the mid-market and lower.

    The office market remains strong relative to the past few years. The panel expects a moderate increase in construction and somewhat slower absorption growth in 2019. Vacancies are expected to rise slightly as a result.

    The industrial market is also expected to stay strong in 2018. Absorptions will be exceeded by new supply. Industrial construction is expected to slow in 2019 as is absorption. Vacancy rates should rise in 2019, albeit, modestly.


Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service2250075006.86,000.0
Belfiore Real Estate Consulting23500
CBRE2500095006.24,774.0
Colliers International2400090005.97,000.0
CRA LLC2550070005.07,000.0
Cromford Report235009500
Cushman & Wakefield2290075005.56,400.0
Elliott D. Pollack & Co.2300070006.07,000.0
Griffin Consulting2450072506.26,450.0
Southwest Growth Partners2380067005.76,500.0
U of A, Eller College2220710099
CONSENSUS2367381055.96,391.0
Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service2740077006.76,300.0
Belfiore Real Estate Consulting25400
CBRE28000105006.44,747.0
Colliers International3000080006.46,500.0
CRA LLC2800085005.08,000.0
Cromford Report265008800
Cushman & Wakefield2960055005.86,900.0
Elliott D. Pollack & Co.2400080006.27,000.0
Griffin Consulting2675074006.36,500.0
Southwest Growth Partners2640062005.95,800.0
U of A, Eller College2378110039
CONSENSUS2689480646.16,468.0
Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
No data available for the selected filter
Residential Forecast
2018 2019 2020
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 Service2250075006.86,000.02740077006.76,300.0
Belfiore Real Estate Consulting2350025400
CBRE2500095006.24,774.028000105006.44,747.0
Colliers International2400090005.97,000.03000080006.46,500.0
CRA LLC2550070005.07,000.02800085005.08,000.0
Cromford Report235009500265008800
Cushman & Wakefield2290075005.56,400.02960055005.86,900.0
Elliott D. Pollack & Co.2300070006.07,000.02400080006.27,000.0
Griffin Consulting2450072506.26,450.02675074006.36,500.0
Southwest Growth Partners2380067005.76,500.02640062005.95,800.0
U of A, Eller College22207100992378110039
CONSENSUS2367381055.96,391.02689480646.16,468.0
Actuals From Phoenix Housing Market Letter and CBRE
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
2017 Actuals1930687255.67,317.0
2016 Actuals1801580225.25,731.0



Office Forecast (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption
Arizona Public Service*2.0014.002.80
CBRE0.8016.301.64
Colliers International*2.1015.202.80
Cushman & Wakefield**1.5016.000.58
Elliott D. Pollack & Co.1.5016.002.00
Lee & Associates*1.5018.502.20
CONSENSUS1.5716.002.00
Office Forecast (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption
Arizona Public Service*3.0013.103.00
CBRE0.6016.300.75
Colliers International*2.3015.102.20
Cushman & Wakefield*1.2016.500.51
Elliott D. Pollack & Co.1.8015.802.50
Lee & Associates*1.5018.002.50
CONSENSUS1.7315.801.91
Office Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
No data available for the selected filter
Office Forecast (Millions of Sq. Ft.)
2018 2019 2020
Organization Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption
Arizona Public Service*2.0014.002.803.0013.103.00
CBRE0.8016.301.640.6016.300.75
Colliers International*2.1015.202.802.3015.102.20
Cushman & Wakefield**1.5016.000.58
Elliott D. Pollack & Co.1.5016.002.001.8015.802.50
Lee & Associates*1.5018.502.201.5018.002.50
CONSENSUS1.5716.002.001.7315.801.91
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.

2017 Actuals0.5616.402.84
2016 Actuals0.6817.403.22


Retail Forecast (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption (Units)
Arizona Public Service1.208.302.80
CBRE0.158.001.50
Colliers International1.007.602.00
Cushman & Wakefield0.799.301.24
CONSENSUS0.798.301.89
Retail Forecast (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption (Units)
Arizona Public Service1.308.102.60
CBRE0.187.800.95
Colliers International1.607.202.40
Cushman & Wakefield1.1411.601.10
CONSENSUS1.058.701.76
Retail Forecast
Organization Construction Vacancy (Year End %) Absorption (Units)
No data available for the selected filter
Retail Forecast (Millions of Sq. Ft.)
2018 2019 2020
Organization Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption
Arizona Public Service1.208.302.801.308.102.60
CBRE0.158.001.500.187.800.95
Colliers International1.007.602.001.607.202.40
Cushman & Wakefield0.799.301.241.1411.601.10
CONSENSUS0.798.301.891.058.701.76
Actuals From CBRE (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption (Units)
2017 Actuals0.158.101.60
2016 Actuals0.008.901.32


Industrial Forecast (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption
Arizona Public Service**5.007.906.90
CBRE*8.407.609.40
Colliers International**7.307.806.50
Cushman & Wakefield**4.267.604.17
Lee & Associates*8.707.208.50
CONSENSUS-TOTAL SPACE6.737.607.09
Industrial Forecast (Millions of Sq. Ft.)
Organization Construction Vacancy (Year End %) Absorption
Arizona Public Service**5.107.606.50
CBRE*5.808.406.00
Colliers International**7.507.906.40
Cushman & Wakefield**2.667.802.20
Lee & Associates*6.007.506.70
CONSENSUS- TOTAL SPACE5.417.805.56
Industrial Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
No data available for the selected filter
Industrial Forecast (Millions of Sq. Ft.)
2018 2019 2020
Organization Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption Construction Vacancy (Year End %) Absorption
Arizona Public Service**5.007.906.905.107.606.50
CBRE*8.407.609.405.808.406.00
Colliers International**7.307.806.507.507.906.40
Cushman & Wakefield**4.267.604.172.667.802.20
Lee & Associates*8.707.208.506.007.506.70
CONSENSUS-TOTAL SPACE6.737.607.09
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.

2017 Actuals5.506.809.90
2016 Actuals3.328.009.50