The asking lease rates for retail property in the Phoenix metro area, although leveling off in the last year, have been going down since mid 2008, the same can be said for the east valley with the exception of Gilbert, which has seen a slight (less than 2%) increase in asking rent for retail property in the past 3 months.
According to LoopNet, the number of available retail spaces has fallen by 6.6% (inventory going down) over the last year in the Phoenix Metro Area. However demand on LoopNet for retail properties spiked in the Phoenix Metro Area market, rising 21.4% since December 2011.
Of course even commercial real estate is “local” several weeks ago I was searching for retail property for a client in the east valley to lease and had located a new building with up to 6 suites, about to be completed that was in the area my client was interested in.
I contacted the leasing agent to inquire as to the price (the property was not listed), and I was quoted a price that was 50% higher than anything that had actually been moving in that area in the previous 6 months. When I pointed this out and asked how firm the rate was the leasing agent said he was talking with 9 companies interested in space in the building and suggested I show my client the properties that were 50% less (buy the way this property currently has NO anchor). I mentioned this in a company meeting and a couple of over agents didn’t think they would ever lease it out at that lease, I disagreed but felt it would several months before all 6 spaces would be leased at that price.
Several weeks have passed, I found a better space ( with a major anchor) for less than that other building, oh and speaking of that other building, in less than 2 months all but 1 of the 6 suites are leased out.
So is this just a isolated area in the east valley, starved for more retail businesses and business owners that have found an area with a need that they are scrambling to fill? Or have we started to turn the corner and will we see retail lease rates and demand for retail property going up?
What do you think?
This information is for informational purpose and not intended to be investment advise, and should be explained to you in detail. You should always feel free to consult an attorney and/or tax adviser to obtain further information you deem necessary. I want you to be prepared.