R.O.I. Real State – Commercial Newsletter – November 2023
Posted on December 11, 2023
The Greater Phoenix commercial real estate market has not seen much change since the previous issue of The Real State. Institutional buyers and investment-driven deals remain on hold. That said, there will always be buyers looking for the right opportunities at the right price.
The current buyer pool tends to skew towards buyers in economically resilient owner-occupants, and private equity funds—especially those that are more entrepreneurial or value driven. They recognize the opportunity in the marketplace, thanks to the recent price adjustments that have been happening in multifamily and those that were already baked into the office cake over the past year plus. Industrial appears to be holding steady for now. Seller financing and assumable loans have helped owners bridge the gap in interest rates and return expectations, while helping sellers achieve higher pricing.
While the residential market traditionally gets quieter over the holidays as many homeowners temporarily de-activate their properties, the commercial market can be quite busy. For business or other financial reasons, buyers may be motivated to close before the end of the year, although we are seeing a notable lack of 1031 exchange activity.
Regardless of whether Q4 2023 finishes with a flurry of activity, the final sales numbers will ring in the New Year dramatically below the past two years—and even the pandemic-hindered 2020. The big takeaway for 2023 has been significantly lower transaction volume overall—and in every commercial asset class