Updated January 7, 2017

Based on Data Available Fourth Quarter, 2016

Real Estate Market Still Looks Good

By Elliott Pollack
Greater Phoenix Blue Chip
Fourth Quarter, 2016

    The first post-Trump election Greater Phoenix Blue Chip Real Estate Consensus survey changed very little from the pre-Trump election survey compiled earlier in the third quarter of 2016. Given how pro-real estate Donald Trump’s proposed economic positions seem to be, this is surprising. Either way, the near term outlook for real estate in Greater Phoenix remains bullish. The panel expects new single family permits to increase from modestly over 18,000 units in 2016 to 22,115 units in 2017 and 24,848 units in 2018. These are gains of 12% in 2017 and another 12.4% in 2018. That would make 2017 the best single family housing year in Greater Phoenix since 2007.

    Apartments are expected to do well despite permits slowing from about 7,600 in 2016 to 6,687 in 2017 and 6,490 in 2018. Absorption is projected to be in a range of 5,500-6,500 in each of the three years. Vacancy rates are expected to be relatively flat, remaining near the fourth quarter 2016 low level (5.9% ) through 2017 (6.1%) and into 2018 (6.3%). This suggests the current supply/demand imbalance that allowed rental rates in apartments to increase 8% in 2016 will continue. Such dynamics would likely cause more units to be brought to the market.

    The office market is forecasted to remain strong. New spec construction, which was just under 2.0 million square feet in 2016, is expected to be about 1.7 and 1.8 million square feet respectively in 2017 and 2018. Absorption, at about 2.9 million square feet, is projected to outpace new construction in all three years. Thus, vacancy rates in the office category should continue to drop from about 16.9% at year-end 2016 to about 15.3% by year-end 2018. The 2018 level of vacancy has historically been associated with rapid increases in rents and new construction.

    The outlook for the industrial market looks particularly good. New construction is expected to be between 3.6-3.8 million square feet each year, while absorption will be in the 6.5-6.9 million square-foot range each year. Thus, vacancy rates, which are already low, should continue to drop from the current 9.6% rate to 8.6% by year-end 2018.

    The retail market remains more problematic. New spec construction is expected to remain at levels that were considered low by pre-2007 standards. New spec construction was about 1.2 million square feet in 2016. It is projected to be higher in 2017 and 2018. Absorption is forecasted to be modest at between 2.1 and 2.8 million square feet in the 2016-2018 period. But, it is still strong enough to bring vacancy rates down from 9.3% this year to 8.3% by year-end 2018.

The table below provides actuals and forecasts from Greater Phoenix Blue Chip panelists for single-family permits, multi-family permits, apartment vacancy (Q4%), and apartment absorption.


Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service1970076007.08,800.0
Belfiore Real Estate Consulting18400
CBRE1800071005.07,500.0
Colliers International1800080005.55,800.0
CRA LLC1880070005.55,500.0
Cromford Report181507900
Cushman & Wakefield1800080005.46,000.0
Elliott D. Pollack & Co.1800065005.87,200.0
Griffin Consulting1800075005.96,300.0
ROI Properties1750095006.83,600.0
Southwest Growth Partners1880067505.66,800.0
U of A, Eller College201218186
CONSENSUS1845676405.86,389.0
Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service2500075007.06,600.0
Belfiore Real Estate Consulting21200
CBRE2000065004.96,700.0
Colliers International2400065006.25,200.0
CRA LLC2400060006.06,000.0
Cromford Report208007100
Cushman & Wakefield1900075005.28,000.0
Elliott D. Pollack & Co.2000060005.78,000.0
Griffin Consulting2225066006.16,100.0
ROI Properties2310050007.52,500.0
Southwest Growth Partners2250055005.95,200.0
U of A, Eller College235259353
CONSENSUS2211566876.16,033.0
Residential Forecast
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service3300077007.06,800.0
Belfiore Real Estate Consulting25300
CBRE2200060005.05,700.0
Colliers International2800062006.65,200.0
CRA LLC2600065006.56,000.0
Cromford Report225006
Cushman & Wakefield1950070005.07,500.0
Elliott D. Pollack & Co.2300080005.78,000.0
Griffin Consulting2450063006.25,650.0
ROI Properties2500037008.02,000.0
Southwest Growth Partners2400035006.52,500.0
U of A, Eller College253819637
CONSENSUS2484864906.35,483.0
Residential Forecast
2016 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) Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Arizona Public Service1970076007.08,800.02500075007.06,600.03300077007.06,800.0
Belfiore Real Estate Consulting184002120025300
CBRE1800071005.07,500.02000065004.96,700.02200060005.05,700.0
Colliers International1800080005.55,800.02400065006.25,200.02800062006.65,200.0
CRA LLC1880070005.55,500.02400060006.06,000.02600065006.56,000.0
Cromford Report181507900208007100225006
Cushman & Wakefield1800080005.46,000.01900075005.28,000.01950070005.07,500.0
Elliott D. Pollack & Co.1800065005.87,200.02000060005.78,000.02300080005.78,000.0
Griffin Consulting1800075005.96,300.02225066006.16,100.02450063006.25,650.0
ROI Properties1750095006.83,600.02310050007.52,500.02500037008.02,000.0
Southwest Growth Partners1880067505.66,800.02250055005.95,200.02400035006.52,500.0
U of A, Eller College201218186235259353253819637
CONSENSUS1845676405.86,389.02211566876.16,033.02484864906.35,483.0
Actuals From Phoenix Housing Market Letter and CBRE
Organization Single-family permits Multi-family permits Apartment Vacancy (Q4 %) Apartment Absorption (Units)
Actuals1590227065.38,730.0
Actuals1084044707.63,980.0



Office Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service1.8016.101.50
CBRE2.1017.003.50
Colliers International*2.3016.103.50
Cushman & Wakefield**1.2017.603.60
Elliott D. Pollack & Co.2.0017.803.50
Lee & Associates1.8018.202.10
ROI Properties1.8015.503.20
CONSENSUS1.8616.902.99
Office Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service2.3015.702.60
CBRE1.3016.003.00
Colliers International*2.1014.703.70
Cushman & Wakefield**1.4017.202.80
Elliott D. Pollack & Co.2.0016.503.00
Lee & Associates1.7017.302.00
ROI Properties1.2015.002.80
CONSENSUS1.7116.102.84
Office Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service3.0015.003.10
CBRE1.0015.003.00
Colliers International*2.8013.604.00
Cushman & Wakefield**1.0017.001.80
Elliott D. Pollack & Co.2.5015.503.50
Lee & Associates1.3016.602.50
ROI Properties1.0014.502.80
CONSENSUS1.8015.302.96
Office Forecast
2016 2017 2018
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.) Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.) Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service1.8016.101.502.3015.702.603.0015.003.10
CBRE2.1017.003.501.3016.003.001.0015.003.00
Colliers International*2.3016.103.502.1014.703.702.8013.604.00
Cushman & Wakefield**1.2017.603.601.4017.202.801.0017.001.80
Elliott D. Pollack & Co.2.0017.803.502.0016.503.002.5015.503.50
Lee & Associates1.8018.202.101.7017.302.001.3016.602.50
ROI Properties1.8015.503.201.2015.002.801.0014.502.80
CONSENSUS1.8616.902.991.7116.102.841.8015.302.96
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.

Actuals2.1519.403.70
Actuals0.7321.101.97


Retail Forecast
Organization Construction Vacancy (Year End %) Absorption (Units)
Arizona Public Service2.708.504.10
CBRE0.109.001.25
Colliers International1.509.301.90
Cushman & Wakefield0.8011.001.20
ROI Properties0.808.502.00
CONSENSUS1.189.302.13
Retail Forecast
Organization Construction Vacancy (Year End %) Absorption (Units)
Arizona Public Service5.807.707.10
CBRE0.158.501.40
Colliers International1.508.902.20
Cushman & Wakefield0.6010.201.20
ROI Properties0.708.202.15
CONSENSUS1.758.702.81
Retail Forecast
Organization Construction Vacancy (Year End %) Absorption (Units)
Arizona Public Service5.707.006.80
CBRE0.208.001.20
Colliers International2.008.502.50
Cushman & Wakefield0.4010.200.40
ROI Properties0.308.001.50
CONSENSUS1.728.302.48
Retail Forecast
2016 2017 2018
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.) Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.) Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
Arizona Public Service2.708.504.105.807.707.105.707.006.80
CBRE0.109.001.250.158.501.400.208.001.20
Colliers International1.509.301.901.508.902.202.008.502.50
Cushman & Wakefield0.8011.001.200.6010.201.200.4010.200.40
ROI Properties0.808.502.000.708.202.150.308.001.50
CONSENSUS1.189.302.131.758.702.811.728.302.48
Actuals From CBRE
Organization Construction Vacancy (Year End %) Absorption (Units)
2015 Actuals0.009.101.15
2014 Actuals0.009.601.49


Industrial Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
CBRE3.508.208.20
Colliers International**5.8010.206.30
Cushman & Wakefield**3.109.107.40
Lee & Associates**3.0010.005.60
ROI Properties3.8010.305.00
CONSENSUS3.849.606.50
Industrial Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
CBRE3.007.707.50
Colliers International**6.509.906.80
Cushman & Wakefield**3.008.407.80
Lee & Associates**3.109.507.00
ROI Properties2.309.804.40
CONSENSUS3.589.106.70
Industrial Forecast
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
CBRE4.007.207.20
Colliers International**7.009.407.60
Cushman & Wakefield**2.708.507.10
Lee & Associates**3.758.307.50
ROI Properties1.609.405.40
CONSENSUS3.818.606.96
Industrial Forecast
2016 2017 2018
Organization Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.) Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.) Construction Vacancy (Year End %) Absorption (Millions Of Sq.Ft.)
CBRE3.508.208.203.007.707.504.007.207.20
Colliers International**5.8010.206.306.509.906.807.009.407.60
Cushman & Wakefield**3.109.107.403.008.407.802.708.507.10
Lee & Associates**3.0010.005.603.109.507.003.758.307.50
ROI Properties3.8010.305.002.309.804.401.609.405.40
CONSENSUS3.849.606.503.589.106.703.818.606.96
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.

2015 Actuals3.3510.107.05
2014 Actuals2.1311.006.21