Survey Phoenix real estate market recovering
Street view of the Phoenix real estate market recovering.

Survey: Phoenix real estate market recovering

May 1, 2023

The past few years have been tough on the Phoenix commercial real estate market, but it may be set to improve in 2024.

Recently, the W.P. Carey School of Business at Arizona State University released its quarterly survey of real estate brokers participating in the Commercial Real Estate Brokers Forum. A full 100 percent of those surveyed said that the Phoenix commercial real estate market is fully in recovery. This consensus is not insignificant, particularly considering that only 84 percent of those surveyed in the fourth quarter of last year said that the market was in recovery.Although many of those surveyed said that they expected the Phoenix real estate market to improve overall as the nation’s economy continues to improve, this optimism was tempered by a belief that the recovery was likely to remain slow for the rest of this year. That said, the commercial markets in some areas – including Scottsdale and central Phoenix – appear to be showing greater progress than many expected. Indeed, about 90 percent of those surveyed said that they did not believe that land prices in Phoenix had peaked.

Other important findings of the survey include:

  • About 73 percent of those surveyed said that the market was on its way up, while 27 percent said it is static
  • All of those surveyed said that homebuilders have not stopped purchasing land
  • Approximately 64 percent said that vacancy rates are likely to decrease, while 27 percent said there would be no increase and nine percent said that rates would increase
  • About 9 percent said that interest rates for commercial loans were likely to increase this quarter, while 91 percent said they were likely to remain the same

The experts polled also disagreed on whether real estate investors were likely to realize a return in the first quarter of this year. About 67 percent said that things were likely to remain where they are, while 18 percent said returns would go up and 18 percent said they would go down.

The reality, of course, is that it is difficult to predict what conditions are likely to be over the next year with any certainty. If nothing else, it does appear that the commercial real estate market in Phoenix and elsewhere in Arizona is improving, if only slightly.

If you are considering investing in commercial real estate or if you have a question about leasing or other commercial real estate matters, speak to an experienced real estate attorney.