Market Insights

Industrial Sector

Phoenix Leads Nationally: In Q4 2024, Phoenix ranked first among U.S. industrial markets, delivering 7.16 million square feet of industrial space, representing a 1.88% expansion of its industrial stock. The city also led the nation with 22.3 million square feet under development, projecting a 5.8% inventory growth. AZ Big Media

Investment Surge: Investment sales volume in Phoenix’s industrial sector reached $1.88 billion in Q4 2024, culminating in a total of $4.27 billion for the year, marking the highest level since 2021. Colliers

Retail Sector

Robust Performance: As of 2024, Phoenix’s retail market encompassed 249 million square feet across over 17,000 properties, with an average vacancy rate of 4.9%. Properties over 10,000 square feet had an average rent just under $26/SF/NNN and a vacancy rate of 6.7%. realestatedaily-news.com

Office Space

Adaptive Reuse Projects: In response to evolving market demands, underutilized office spaces in Phoenix are being converted into residential units. For example, the Canyon Corporate Center, a 312,000-square-foot office park, is slated for transformation into several hundred apartment units, addressing the city’s housing shortage. Axios

Home Prices and Sales

Modest Price Increase: As of August 2024, Arizona’s median home price was $442,900, reflecting a 1.3% year-over-year increase. noradarealestate.com

Sales Activity: The number of homes sold decreased by 7.9%, indicating a potential slowdown in buyer activity. noradarealestate.com+1Redfin+1

Inventory Levels

Rising Supply: There were 36,992 homes for sale, a 26% increase compared to the previous year, suggesting a shift towards a more balanced market. noradarealestate.com

Regional Highlights

Eloy and Midtown Phoenix: These areas experienced significant median sales price gains in 2024, with Eloy leading at a 21.5% increase and Midtown Phoenix at 19.2%. AZ Big Media+1Houzeo+1

Market Growth

Positive Outlook: The Arizona short-term rental industry is projected to experience an overall growth rate of 5-7%, with the market stabilizing as supply plateaus and demand remains steady. Short Term Rental Manager

Regulatory Environment

Evolving Legislation: Arizona’s legal framework for short-term rentals has seen significant shifts, with legislation such as Senate Bill 1350 easing constraints on vacation rental regulations. However, new legislative propositions aim to grant cities enhanced regulatory authority over short-term rentals, making it imperative for investors and property owners to stay informed. Gottlieb Law

Impact on Housing Supply

Housing Shortage Concerns: The proliferation of short-term rentals has raised concerns about exacerbating Arizona’s housing shortage, as residential homes are increasingly used as vacation properties, reducing the availability of long-term housing options.