Phoenix Growing in Popularity for CRE Investors, According to Report

Article originally posted on Phoenix Business Journal on March 13, 2019
A California investor bought the 2020 on Central building for $23.89 million. The Valley continues to be a popular market for CRE investors.

Phoenix is continuing to become more popular among commercial real estate investors, jumping up in the rankings from last year, according to a survey done by CBRE of cities in the Americas.

Phoenix was ranked ninth among the most attractive cities for property investment in the 2019 Investor Intentions Survey, compared with No. 11 in the same survey last year.

The survey asks developers, investment managers, real estate investment trusts and other investors about appetites for risk, predicted investment activity for the year and key concerns.

Phoenix, along with several other so-called secondary markets, including Denver, Orlando, Nashville and Minneapolis/St. Paul scored higher in 2019 than last year. Houston, Austin, San Diego and Portland were among the secondary markets that ranked lower than last year on this year’s survey. Los Angeles/Southern California retained the top spot on the list, which it has held since 2016, followed by Dallas/Fort Worth.

According to the report, the year’s top property type preference in Phoenix was multifamily, and investors’ top strategy is value-add opportunities. Nationwide, the most attractive property type was industrial and logistics.

Barry Gabel, an executive vice president at CBRE in Phoenix, said he expects to see continued investor interest from around the country and internationally in Phoenix during the next few years.

“We are getting different capital all coming here,” he said, adding that net migration into Phoenix continues to outpace much of the rest of the country and various product types have attracted outside investment.

Sperry Equities, an Irvine, California-based investment firm, recently purchased the 2020 on Central office building, part of a plan to invest $100 million into real estate around Phoenix in the next year.

Burton Young, president of Sperry, said the activity is in part because Phoenix has captured companies and people leaving California and other higher-cost markets and it continues to be a desirable place to do business.

“Phoenix is one of the larger ‘small markets’ and has lots of institutional investment,” Young said. “It has every component you’d want in a community for business to excel.”