Industrial and multi-family are leading the commercial real estate rebound
The commercial real estate market was ravaged by the down economy, although it didn?t make disaster headlines like its residential counterpart. There was a day when the metropolitan Phoenix area was tops when it came to building companies expanding and actual construction of commercial projects here in the Valley. Office space, multi-tenant and industrial projects were at all-time highs, but then took such a sharp decline the news was actually the fact that there were, literally, no new projects in our market. Today, the commercial market is showing pockets of strength as it limps into the future.
Multi-family has been the segment of commercial first to recover. ?New construction is dominated by the multi-family market,? says David S. Miller, vice president of national accounts, commercial sales manager with Chicago Title Agency. Jim Swanson, president and CEO of Kitchell Corporation, a Phoenix-based development and construction company, calls multi-family the ?development hot spot.?
?On the investment side, multi-family has led the commercial market in sales. We were the first to recover, so it was a safer place to invest,? says David Fogler, executive VP with the multi-housing investment group at real estate brokerage Cassidy Turley?s Phoenix office. While citing 62 projects with a total of 19,000 units in the pipeline ? with the caveat that it?s unlikely all of them will ultimately be built ? Fogler points out this comes on the heels of an economic downturn that saw many former homeowners foreclosed out of their homes. Home ownership had risen to the unusual high of 70 percent of households, so the drop in homeownership is really just taking it back to normal levels, he explains. However, the bottom line on the current strength of the multi-family market is it?s due to this drop in home ownership rather than to job growth.
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Article appeared in the September 2012 issue
Source: http://inbusinessmag.com/feature-stories/commercial-real-estate-building-ourselves-back/
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