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Retail Center Sales Gained Momentum in Second Quarter
Phoenix, August 9, 2017– The Greater Phoenix real estate investment market started the year slow, but reversed course during second quarter. The most recent three months posted more property sales, higher prices and compressed cap rates, according to a report released by Colliers International in Greater Phoenix. The full report can be read by clicking Here.
Sales of shopping centers recorded one of the most dramatic increases during second quarter, spiking more than 50 percent over the first three months. Median prices of shopping centers rose 20 percent in the second quarter compared to first and the greatest increase in transactions took place in $10 million+ properties.
Sales of traditional office buildings slowed 15 percent from the end of first quarter. The median price to date is $137 per square foot, which is slightly below the 2016 median price. However, prices rose during second quarter, posting an average $150 per square foot. Larger buildings are trading at higher prices. Properties over 100,0000 square feet sold for a median price of $206 per square foot during second quarter. As prices rose, cap rates compressed to an average of 7.3 percent.
Industrial building sales rose approximately five percent during second quarter. Total transaction activity for the first half of 2017 was down six percent from the first half of 2016. Strong market fundamentals are driving up sales prices, with the median price rising to $83 per square foot in second quarter. Cap rates compressed slightly in this product type, dipping to approximately 7.25 percent.
Sales of medical office condos shot up by more than 50 percent from first to second quarter of this year. Many of these transactions were focused in Scottsdale and the Southeast Valley.
The median price for medical office condos rose 13 percent in second quarter to $192 per square foot. Sales of traditional, non-condo medical office buildings dropped off nearly 50 percent from first to second quarter. One large portfolio transaction was completed, but otherwise, this arena has slowed. The median price in traditional, non-condo medical office buildings was $132 per square foot in second quarter, but the price range was very wide in this sector. A few properties traded for more than $250 per square foot, while others sold for less than $100 per square foot.
Investor demand in the market has been strong enough to offset the Federal Reserve’s interest rate increases. Net absorption has been strong, vacancies are tightening and rents are rising throughout much of Greater Phoenix. This sets the stage for a healthy investment market to continue.
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About Colliers International Group
Colliers International Group Inc. (NASDAQ and TSX: CIGI) is an industry-leading global real estate services company with 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.
Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 12 consecutive years, more than any other real estate services firm.
Colliers International in Greater Phoenix has served clients locally and globally for more than 35 years.