Research &
Forecast Report
GREATER PHOENIX | INVESTMENT
4Q 2016
Investment Overview
>> Sales of commercial properties were mixed during the fourth
quarter. Activity spiked in a few sectors, with the greatest
increases occurring in large industrial buildings and in medical
office condos. For the full year, transaction activity in 2016 closely
tracked 2015 levels.
Phoenix Pricing Trends
by Property Type
2014
>> Prices generally ticked higher or held steady in 2016. Shopping
centers and office properties recorded some of the strongest
gains, due in part to tightening vacancies in these property types.
>> The Greater Phoenix investment market recorded a year of steady
performance in 2016. Sales velocity remained near 2015 ranges,
median prices edged higher and cap rates compressed a bit.
Looking ahead, additional strengthening in property fundamentals
should support the local investment market. Interest rates and
borrowing costs could rise in the year ahead.
2016
$175
$150
Median Sales Price (par SF)
>> Cap rates ticked lower during the fourth quarter, even as interest
rates spiked in the final two months of the year. Cap rates
averaged approximately 7 percent for shopping centers, were in the
low- to mid-7 percent range in industrial and office transactions,
and dipped below 8 percent in medical office buildings.
2015
$200
$125
$100
$75
$50
$25
$0
Office
Medical Office
MOB Condos
Industrial
Shopping Centers
FOR MORE INFORMATION
Bob Mulhern
Senior Managing Director | Greater Phoenix
+1 602 222 5038
[email protected]
Jim Keeley SIOR
Founding Partner | Scottsdale Office
+1 480 655 3300
[email protected]
Pete O’Neil
Research Director | Greater Phoenix
+1 602 222 5029
[email protected]
>> Transaction activity in the office segment ticked slightly higher
in the fourth quarter, advancing 4 percent from the preceding
period. In 2016, total sales velocity lagged 2015 levels by
approximately 3 percent. Transaction activity levels were quite
consistent from quarter-to-quarter in 2016; there was much
greater volatility in 2015.
Sales Price
Cap Rate
$175
10%
$150
9%
$125
8%
$100
7%
$75
Average Cap Rate
>> Sales prices ticked higher to close the year. The median price
in transactions in the fourth quarter was $145 per square
foot, compared to $141 per square foot in the third quarter.
The median price for the full year was $134 per square foot, 8
percent higher than in 2015.
Investment Trends > Office
Median Price per SF
Office
6%
$50
>> Cap rates in the fourth quarter ticked lower, averaging
approximately 7.4 percent. The average cap rate for 2016 was
7.6 percent, nearly identical to the 2015 average.
5%
$25
$0
2009
2010
2011
2012
2013
2014
2015
2016
4%
OFFICE SALE ACTIVITY
Property Address
Submarket
Sale Date
Size (SF)
Sale Price
Sale Price/SF
2 & 40 N Central Ave., Phoenix
Downtown South
12/21
765,508
$151,250,000
$157
3100 & 3200 W Ray Rd., Chandler
South Tempe/
Ahwatukee
12/15
266,531
$58,500,000
$219
3200 N Central Ave., Phoenix
Downtown North
11/3
344,958
$49,000,000
$142
Medical Office
>> Sales of medical office condos rose by more than 30 percent from
the third quarter to the fourth quarter. This was the strongest
single quarter of activity since the fourth quarter of 2012. For the
year, transaction activity spiked by more than 35 percent.
Investment Trends > Medical Office
MOB Condos
>> The median price for medical office condos dipped in the fourth
quarter, falling 7 percent to $163 per square foot. In 2016, the
median price rose to $174 per square foot, 9 percent higher than
the 2015 median price.
>> The median price in traditional medical office buildings rose 10
percent in the fourth quarter, reaching $143 per square foot. The
median price in 2016 was $131 per square foot, 5 percent higher
than in 2015. Cap rates dipped below 8 percent in 2016, declining
approximately 30 basis points from the 2015 average.
$175
$150
Median Sales Price (per SF)
>> Sales of traditional, non-condo medical office buildings was largely
consistent throughout much of 2016, and transaction activity ticked
up 8 percent from the third quarter to the fourth quarter. For all of
2016, transaction activity was nearly identical to the 2015 total.
Traditional MOBs
$200
$125
$100
$75
$50
$25
$0
2009
2010
2011
2012
2013
2014
2015
2016
MEDICAL OFFICE SALE ACTIVITY
Property Address/Name
Submarket
Sale Date
Size (SF)
Sale Price
Sale Price/SF
9069 W Thunderbird Rd., Peoria
Arrowhead
11/2
60,000
$20,050,000
$334
8960 & 8962 E Desert Cove Ave., Scottsdale
Scottsdale Central
11/1
22,336
$6,620,000
$296
2
Greater Phoenix Research & Forecast Report | 4Q 2016 | Investment | Colliers International
Industrial
Investment Trends > Industrial
Sales Price
>> Cap rates compressed in the fourth quarter, dipping to
approximately 7 percent, after averaging 7.5 percent in the first
three quarters of 2016. The average cap rate for 2016 was 7.3
percent, 30 basis points lower than the average in 2015.
Cap Rate
$100
10%
$80
9%
$60
8%
$40
7%
$20
6%
$-
2009
2010
2011
2012
2013
2014
2015
2016
Average Cap Rate
>> Sales trends were mixed, but generally prices remained close to
earlier ranges. The median price reached $74 per square foot
during the fourth quarter, up 4 percent from the third quarter.
For all of 2016, the median price was $71 per square foot, 2
percent lower than the median price in 2015.
Median Price per SF
>> Sales of industrial buildings spiked by more than 20 percent
from the third quarter to fourth quarter. The strong close to 2016
moved total transaction activity for the year 6 percent ahead of
the 2015 level. Velocity in buildings selling between $20 million
and $40 million more than doubled from 2015 to 2016.
5%
INDUSTRIAL SALE ACTIVITY
Property Address/Name
Submarket
Sale Date
Size (SF)
Sale Price
Sale Price/SF
4320 S Cotton Ln., Goodyear
Goodyear
11/17
752,808
$42,850,000
$57
1115 W Almeda Dr., Tempe
Tempe Southwest
12/16
780,320
$40,000,000
$69
1115 N 47th Ave. & 4411 W Roosevelt Rd.,
Phoenix
SW N of Buckeye Road
11/15
452,271
33,550,000
$74
>> Sales of shopping centers slowed by approximately 10 percent
in the fourth quarter. Transaction counts were uneven throughout
the year, with activity peaking during the second quarter. For
the year, sales velocity was up approximately 5 percent from
2015 levels.
>> Shopping center cap rates inched lower in the final few
months of 2016. The average cap rate in transactions during
the fourth quarter was 6.5 percent, down from 6.8 percent
in the third quarter. For all of 2016, cap rates averaged
approximately 7 percent, 70 basis points lower than the
2015 average.
Sales Price
Cap Rate
$175
10%
$150
9%
$125
8%
$100
7%
$75
Average Cap Rate
>> Prices pushed higher as retail fundamentals strengthened in
2016. The median price in shopping center sales spiked up 20
percent in 2016, reaching $133 per square foot. The median price
in fourth quarter transactions was $127 per square foot.
Investment Trends > Shopping Centers
Median Price per SF
Shopping Centers
6%
$50
5%
$25
$0
2009
2010
2011
2012
2013
2014
2015
2016
4%
SHOPPING CENTERS SALE ACTIVITY
Property Address/Name
Submarket
Sale Date
Size (SF)
Sale Price
Sale Price/SF
8606-8776 E Shea Blvd., Scottsdale
Central Scottsdale
12/29
238,303
$46,150,000
$194
4907-4965 W Bell Rd., Glendale
Glendale
12/1
167,049
$14,750,000
$88
1721-1761 E Warner Rd., Tempe
Chandler
11/30
100,228
$11,200,000
$112
Copyright © 2017 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
3
Colliers International | Greater Phoenix
2390 E. Camelback Road, Suite 100
Phoenix, AZ 85016
+1 602 222 5000
colliers.com/greaterphoenix
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