PHOENIX – The Valley’s commercial real estate market will continue to improve slowly in 2015 with promising growth in residential rental housing, an Arizona State University real estate professor said.
“We don’t see big changes in 2015 at all,” Mark Stapp with ASU’s Center for Real Estate Theory and Practice told those attending the SRP 2015 Economic Forecast on Oct. 2.
However, Stapp said population growth in the metro area will increase demand for apartments over the longer term.
“Obviously, the dominant form of housing in the metro area has been apartment,” he said.
Stapp and other ASU researchers survey real estate brokers to develop quarterly forecasts of the commercial real estate market, which also includes offices, industrial spaces and retail rentals.
He said the Phoenix area is still deemed as a recovery market by investors, though he said none of the respondents expected returns on investment to increase in the last half of 2014.
Stapp highlighted a marked increase in respondents who expected rents to go up from the second quarter to third quarter. A July report from ASU’s W.P. Carey School of Business cited a 7.5 percent rise in residential rents over the past year in metro Phoenix.
He said he expects apartment rents to stabilize as the supply expands.
Noting that the forecast calls for more than 7,000 luxury apartments to be built next year, Stapp said he’s concerned about the supply of affordable apartments that are much more in demand.
“We have to maintain that affordability in living,” he said.