Phoenix Real Estate 2017: Apartments Cool, Homebuilding Gains

Article originally posted on Phoenix Business Journal on March 1, 2017

Construction of new apartments may finally be cooling and home building may be moving more this year.

That is according to a new regional research report from Colliers International Group (Nasdaq: CIGI).

And commercial real estate brokerage stocks are up so this year.

Colliers researchers expect permits for single-family construction to hit 24,000 units in 2017. That is after a 10 percent gain in 2016 to 18,600 units.

Home builders have seen a slow recovery in the Arizona market after the real estate crash.

Home builder stocks were up Wednesday with U.S. markets posting new records.

Taylor Morrison Homes Corp. (NYSE: TMHC) was up 3.38 percent trading at $20.81 per share in midday trading, according to Google Finance.

Meritage Homes (NYSE: MTH) was up 4.22 percent at $37.05 per share Wednesday morning. Meritage and Taylor Morrison are based in Scottsdale.

Expected interest rate increases could also impact real estate deals and growth.

Apartments may finally be leveling off after big build-ups in Phoenix and other U.S. markets in recent years.

“In 2016, more than 9,400 multifamily permits were issued, up from permits for 5,400 units in 2015,” Colliers researchers write in their analysis.

Submarkets such as Tempe, Scottsdale, central and downtown Phoenix and pockets of the East Valley have seen build-ups of apartments.

Colliers and other researchers expect that to cool off some.

“Permitting for multifamily is forecasted to slow by approximately 30 percent in 2017 after several years of robust construction,” according to the report penned by Colliers Research Director Pete O’Neil, Founding Partner Jim Keeley and Senior Managing Director Bob Mulhern.

On the commercial side, vacancy rates are tightening but land sales were flat in 2016 as were overall prices for land deals.

Commercial real estate stocks were also up Wednesday with the Dow Jones Industrial Average up more than 331 points and the 30-stock index passing 21,100 points, according CNBC.

Colliers’ stock was 2.18 percent trading $51.55 per share, according Google Finance.

CBRE Group Inc. (NYSE: CBG) was up more than 2 percent at $36.34.

Jones Lang LaSalle (NYSE: JLL) is up 2.35 percent at $117.39, according to Google Finance.

JLL’s stock is up 16 percent so far this year.

CBRE is up 15.37 percent, according to Google Finance.

Colliers is up 40.2 percent this year.

Those brokerage houses all have big Phoenix operations.

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