Tuesday, March 26, 2019 / by Juan Grimaldo
(Image: Provided by Newmark Knight Frank)
The Palm Valley Pavilions West sold for $44.8 million. It was among several large shopping centers scooped up by investors in the West Valley.
Phoenix continues to be a destination for real estate investors, notably in the retail sector, according to a report released by Marcus & Millichap.
In its 2019 Retail Investment Forecast, the brokerage ranked Phoenix 20th in the National Retail Index, up from 29th place last year. The index ranks markets based on several criteria, including employment growth, vacancy, construction and rents. The nine-place jump tied with Orlando and Columbus for biggest year-over-year gains.
Seattle-Tacoma topped the 2019 list, followed by San Francisco and Raleigh, North Carolina.
According to the report, white-collar job growth in Phoenix, especially in northwestern areas such as Surprise and Glendale's Arrowhead area, contribute to a declining retail vacancy rate, which is expected to drop to below 7 percent, the lowest level since the end of 2007.
“For buyers with larger sums of capital, the cities of Goodyear and Avondale present a number of opportunities, particularly as this part of the metro should continue to witness accelerated household formation,” authors Scott Holmesand John Chang wrote in the report, which goes on to say deals involving power centers and large shopping centers in these cities continue to be prevalent for investors.
Last July, Cleveland-based Stark Enterprises bought The Market at Estrella Falls, at the northeast corner of PebbleCreek Parkway and McDowell Road in Goodyear for $49.1 million from the Macerich Co. and Globe Corp. with plans to develop an additional 10 acres adjacent to the site.
In November, a joint venture between New York-based DRA Advisors LLC and Chicago-based Pine Tree LLC, bought Palm Valley Pavilions West, a 232,577-square-foot shopping center in Goodyear, for $44.8 million.
New retail construction is expected to drop by more than half in 2019, after 1.1 million square feet of space was delivered in 2018.
The forecast predicts retail rents will increase to $16.83 per square foot, an approximately 4 percent increase.
The ranking comes after CBRE ranked Phoenix ninth among cities in its investor intentions survey, with multifamily ranked as the most attractive asset type.
Author: Corina Vanek, Reporter, Phoenix Business Journal