Phoenix-area apartment communities in the second quarter experienced the first significant decreases in average occupancy rate and monthly rent since the end of 2009, according to commercial-real-estate services firm Grubb & Ellis in Phoenix.
It is a disappointing reversal for apartment-property investors, but the firm's analysts said it's not unexpected and should do little to cool the hot investment market for multifamily housing.
The vacancy rate among Phoenix-area apartment communities increased to 9.7 percent in the second quarter, compared with a 9 percent vacancy rate in the first quarter, according to Grubb & Ellis data.
The average monthly rent at Phoenix-area apartment communities dropped by nearly $100 in the second quarter, to $718.48 compared with $815 in the first quarter, the data show.
Grubb & Ellis Vice President David Cravath said the decrease is partly seasonal, the result of students and winter visitors leaving the Phoenix area for the summer.
Investors are hoping the downward trend will reverse itself in August, they said, driven largely by back-to-school rental activity.
In the second quarter of 2010, rent prices remained flat compared with the preceding quarter.
The vacancy rate decreased in the second quarter of 2010, but not as dramatically as it would during the three quarters that followed.
Apartment properties have dominated the Phoenix area's investment market for commercial eal state for the past year, with about half of the purchases being made by real-estate-investment trusts, or REITs.
The other half of purchases have been made primarily by institutional buyers, said Grubb & Ellis Vice President Karl Albert, in addition to a handful of wealthy individuals.
Despite the second-quarter drop in occupancy and rent prices, Cravath and Albert said the long-term investment outlook for apartment properties remains strong.
They noted that occupancy rates improved in some areas of the Valley in the second quarter, including in Tempe, Chandler, Scottsdale and central Phoenix.
About half of those new tenants relocated from other areas, they said, while the other half comprised new renters who had been homeowners or living with family or roommates.
Cravath and Albert acknowledged that some actual and potential challenges exist for apartment investors in the current market.
Delinquent rent payments remain a problem for apartment owners, they said, because of excessive personal debt among tenants and the high cost of gasoline, utilities and other living expenses.
The prices many investors are paying for apartment properties today are based on the assumption that the Phoenix-area job market will improve in the coming years, they added.
Therefore, investors could end up losing if the jobless situation remains stagnant or deteriorates further.
As long as apartment-property buyers and real-estate lenders continue to practice due diligence, they said, it's likely that their future investments in apartment properties will continue to pay off.
"People expect apartments to have a more dominant role (in the housing market) in the next 10 years than they did during the past 10 years," Cravath said.
by J. Craig Anderson The Arizona Republic Aug. 2, 2011 12:00 AM
Phoenix-area apartment occupancy, rents tumble
Showing posts with label vacancies. Show all posts
Showing posts with label vacancies. Show all posts
Sunday, August 7, 2011
Saturday, March 19, 2011
Housing-vacancy rates high in outlying Valley
Metro Phoenix population and housing data from the U.S. Census Bureau shows which cities in the region experienced the most overbuilding during the mid-decade boom. It also shows which areas have the lowest vacancy rates or number of vacant homes.
Many of the region's edge communities experienced big increases in population, but homebuilding still outpaced new residents. Buckeye's population climbed by 678 percent, but the city's number of housing units climbed even more. So now, it has a 21 percent vacancy rate.
Some other Phoenix-area cities with higher-than-average housing vacancies: Apache Junction, 31 percent; Scottsdale, 18.3 percent; and Surprise, 17.7 percent.
Arizona's overall housing-vacancy rate is 15.6 percent.
Three southeast Valley communities posted lower-than-average housing vacancies: Tempe, 10.2 percent; Chandler, 7.9 percent; and Gilbert, 7.4 percent.
Phoenix's housing-vacancy rate is 12.8 percent.
Some Arizona cities with many second-home owners, including Scottsdale and Apache Junction, have housing vacancies that look high to market watchers. Data to be released later this year for Arizona will give those second-home hubs better counts.
More than half underwater
As many as 51 percent of Arizona homeowners are underwater, according to new data from CoreLogic. Nevada has the highest rate of homeowners owing more than their house is worth, at 65 percent. Florida is right behind Arizona, with 47 percent of its homeowners dealing with negative equity.
The national rate for negative equity is 23 percent.
Arizona's rate has actually dropped as more homeowners have lost houses to foreclosure. That means fewer people owe more on a mortgage than their house is worth.
Refinancing aid
The federal Home Affordable Refinancing Program, better known as HARP, has been extended for another year. The program was due to expire at the end of June but was extended despite congressional debates on killing the Home Affordable Modification Program because it has helped fewer than expected.
HARP helps homeowners who owe more than their house is worth to refinance but is limited to 125 percent loan-to-value, so many prospective borrowers in metro Phoenix don't qualify.
by Catherine Reagor The Arizona Republic Mar. 16, 2011 12:00 AM
Housing-vacancy rates high in outlying Valley
Many of the region's edge communities experienced big increases in population, but homebuilding still outpaced new residents. Buckeye's population climbed by 678 percent, but the city's number of housing units climbed even more. So now, it has a 21 percent vacancy rate.
Some other Phoenix-area cities with higher-than-average housing vacancies: Apache Junction, 31 percent; Scottsdale, 18.3 percent; and Surprise, 17.7 percent.
Arizona's overall housing-vacancy rate is 15.6 percent.
Three southeast Valley communities posted lower-than-average housing vacancies: Tempe, 10.2 percent; Chandler, 7.9 percent; and Gilbert, 7.4 percent.
Phoenix's housing-vacancy rate is 12.8 percent.
Some Arizona cities with many second-home owners, including Scottsdale and Apache Junction, have housing vacancies that look high to market watchers. Data to be released later this year for Arizona will give those second-home hubs better counts.
More than half underwater
As many as 51 percent of Arizona homeowners are underwater, according to new data from CoreLogic. Nevada has the highest rate of homeowners owing more than their house is worth, at 65 percent. Florida is right behind Arizona, with 47 percent of its homeowners dealing with negative equity.
The national rate for negative equity is 23 percent.
Arizona's rate has actually dropped as more homeowners have lost houses to foreclosure. That means fewer people owe more on a mortgage than their house is worth.
Refinancing aid
The federal Home Affordable Refinancing Program, better known as HARP, has been extended for another year. The program was due to expire at the end of June but was extended despite congressional debates on killing the Home Affordable Modification Program because it has helped fewer than expected.
HARP helps homeowners who owe more than their house is worth to refinance but is limited to 125 percent loan-to-value, so many prospective borrowers in metro Phoenix don't qualify.
by Catherine Reagor The Arizona Republic Mar. 16, 2011 12:00 AM
Housing-vacancy rates high in outlying Valley
Monday, August 9, 2010
Paradise Valley Mall works to boost occupancy rate
The Valley's newest Costco opened at Paradise Valley Mall last summer. Westcor, which owns the northeast Phoenix mall, hoped the addition of the popular retailer along with the reopening of a movie theater this summer would be the catalyst to increasing the mall's occupancy rate.
A year later, the vacancy rate at Paradise Valley Mall has not changed, with 20 vacant stores.
Mall officials say the economy is to blame, but some critics say that the indoor mall - and others like it - may have already had their best days.
The national vacancy rate for shopping malls is 10.9 percent, while the shopping-mall vacancy rate in Phoenix is 11.4 percent, according to REIS, a New York City company that tracks commercial real estate. The vacancy rate at Paradise Valley Mall is 15 percent.
National and Valley shopping malls had vacancy rates below 9 percent last summer.
Paradise Valley Mall, at the northwestern corner of Tatum Boulevard and Cactus Road, has 20 vacant stores not including kiosks, the same number as last summer. Despite opening several stores over the last year, mall officials said it's the highest number of vacancies in years.
Getting new occupants isn't as simple as some may think, said Thomas Randall, senior property manager at PV Mall.
"Not only are we continuing to rebuild, we're still in the current economic state that the entire nation is in. All those factor into the progress we're making and the speed in which we're trying to accomplish that," Randall said.
Retailers that normally would have opened stores in northeast Phoenix aren't expanding as quickly, he said. And mall officials said attracting a new company may take a while because they are selective about which stores they bring to the mall.
"It's not a matter of attracting the latest and greatest" trends, Randall said. "We (Westcor) all are involved in attracting the right retailer for each one of our centers."
PV Mall may not be experiencing as much success as some Northeast Valley competitors because it is an enclosed shopping center, said Mark Stapp, executive director of the Master's of Real Estate Development program at Arizona State University's W.P. Carey School of Business. Retail experts say shoppers now favor outdoor shopping centers over traditional enclosed malls.
"You've got Kierland Commons, Scottsdale Quarter and Desert Ridge Marketplace within the primary market area for PV Mall, so it is competing in an environment that 15 years ago it wasn't competing in and 10 years ago it was barely competing in," Stapp said.
Still, Randall said, he is not discouraged.
"Our business is very cyclical. There's always going to be a newest and latest and greatest thing. PV Mall has been here for 30 years and will continue to service our immediate trade areas with the best possible," he said.
The Northeast Valley's only other enclosed shopping center has fared much better.
Scottsdale Fashion Square is the Valley's largest mall and is also owned by Westcor. The mall has a 6.9 percent vacancy rate, according to a report from CB Richard Ellis.
Randall said Paradise Valley Mall officials are working on attracting a few things they hope to announce within the next month. He said he remains optimistic about PV's future because it is a mall that responds to its loyal customer base.
"Our trade areas asked for a movie theater and we worked to build that," he said. "If you get discouraged (with hard times), then you'll have a pretty dismal outlook."
by Eugene Scott The Arizona Republic Jul. 31, 2010 07:09 AM
Paradise Valley Mall works to boost occupancy rate
A year later, the vacancy rate at Paradise Valley Mall has not changed, with 20 vacant stores.
Mall officials say the economy is to blame, but some critics say that the indoor mall - and others like it - may have already had their best days.
The national vacancy rate for shopping malls is 10.9 percent, while the shopping-mall vacancy rate in Phoenix is 11.4 percent, according to REIS, a New York City company that tracks commercial real estate. The vacancy rate at Paradise Valley Mall is 15 percent.
National and Valley shopping malls had vacancy rates below 9 percent last summer.
Paradise Valley Mall, at the northwestern corner of Tatum Boulevard and Cactus Road, has 20 vacant stores not including kiosks, the same number as last summer. Despite opening several stores over the last year, mall officials said it's the highest number of vacancies in years.
Getting new occupants isn't as simple as some may think, said Thomas Randall, senior property manager at PV Mall.
"Not only are we continuing to rebuild, we're still in the current economic state that the entire nation is in. All those factor into the progress we're making and the speed in which we're trying to accomplish that," Randall said.
Retailers that normally would have opened stores in northeast Phoenix aren't expanding as quickly, he said. And mall officials said attracting a new company may take a while because they are selective about which stores they bring to the mall.
"It's not a matter of attracting the latest and greatest" trends, Randall said. "We (Westcor) all are involved in attracting the right retailer for each one of our centers."
PV Mall may not be experiencing as much success as some Northeast Valley competitors because it is an enclosed shopping center, said Mark Stapp, executive director of the Master's of Real Estate Development program at Arizona State University's W.P. Carey School of Business. Retail experts say shoppers now favor outdoor shopping centers over traditional enclosed malls.
"You've got Kierland Commons, Scottsdale Quarter and Desert Ridge Marketplace within the primary market area for PV Mall, so it is competing in an environment that 15 years ago it wasn't competing in and 10 years ago it was barely competing in," Stapp said.
Still, Randall said, he is not discouraged.
"Our business is very cyclical. There's always going to be a newest and latest and greatest thing. PV Mall has been here for 30 years and will continue to service our immediate trade areas with the best possible," he said.
The Northeast Valley's only other enclosed shopping center has fared much better.
Scottsdale Fashion Square is the Valley's largest mall and is also owned by Westcor. The mall has a 6.9 percent vacancy rate, according to a report from CB Richard Ellis.
Randall said Paradise Valley Mall officials are working on attracting a few things they hope to announce within the next month. He said he remains optimistic about PV's future because it is a mall that responds to its loyal customer base.
"Our trade areas asked for a movie theater and we worked to build that," he said. "If you get discouraged (with hard times), then you'll have a pretty dismal outlook."
by Eugene Scott The Arizona Republic Jul. 31, 2010 07:09 AM
Paradise Valley Mall works to boost occupancy rate
Sunday, August 1, 2010
PV Mall hurt by vacancies
by Eugene Scott The Arizona Republic Jul. 31, 2010 12:00 AM
The Valley's newest Costco opened at Paradise Valley Mall last summer.
Westcor, which owns the northeast Phoenix mall, hoped the addition of the popular wholesale retailer along with the reopening of a movie theater this summer would be the catalyst to increasing the mall's occupancy.
A year later, the vacancy rate at Paradise Valley Mall has not changed, with 20 empty stores.
Mall officials say the economy is to blame, but some critics say that the indoor mall and others like it may have already had their best days.
The 20 vacancies at Paradise Valley Mall, at the northwestern corner of Tatum Boulevard and Cactus Road, don't include kiosks. Despite the opening of several stores over the last year, mall officials said it's the highest number of vacancies in years.
The vacancy rate at Paradise Valley mall is 15 percent. The national vacancy rate for shopping malls is 10.9 percent, while the shopping-mall vacancy rate in Phoenix is 11.4 percent, according to REIS, a New York City company that tracks commercial real estate.
Getting new occupants isn't as simple as some may think, said Thomas Randall, senior property manager at PV Mall.
"Not only are we continuing to rebuild, we're still in the current economic state that the entire nation is in," Randall said. "All those factor into the progress we're making and the speed in which we're trying to accomplish that."
Retailers that normally would have opened stores in northeast Phoenix aren't expanding as quickly, he said. And mall officials said attracting a new company may take awhile because they are selective about which stores they bring to the mall.
"It's not a matter of attracting the latest and greatest" trends, Randall said. "We (Westcor) all are involved in attracting the right retailer for each one of our centers."
PV Mall hurt by vacancies
The Valley's newest Costco opened at Paradise Valley Mall last summer.
Westcor, which owns the northeast Phoenix mall, hoped the addition of the popular wholesale retailer along with the reopening of a movie theater this summer would be the catalyst to increasing the mall's occupancy.
A year later, the vacancy rate at Paradise Valley Mall has not changed, with 20 empty stores.
Mall officials say the economy is to blame, but some critics say that the indoor mall and others like it may have already had their best days.
The 20 vacancies at Paradise Valley Mall, at the northwestern corner of Tatum Boulevard and Cactus Road, don't include kiosks. Despite the opening of several stores over the last year, mall officials said it's the highest number of vacancies in years.
The vacancy rate at Paradise Valley mall is 15 percent. The national vacancy rate for shopping malls is 10.9 percent, while the shopping-mall vacancy rate in Phoenix is 11.4 percent, according to REIS, a New York City company that tracks commercial real estate.
Getting new occupants isn't as simple as some may think, said Thomas Randall, senior property manager at PV Mall.
"Not only are we continuing to rebuild, we're still in the current economic state that the entire nation is in," Randall said. "All those factor into the progress we're making and the speed in which we're trying to accomplish that."
Retailers that normally would have opened stores in northeast Phoenix aren't expanding as quickly, he said. And mall officials said attracting a new company may take awhile because they are selective about which stores they bring to the mall.
"It's not a matter of attracting the latest and greatest" trends, Randall said. "We (Westcor) all are involved in attracting the right retailer for each one of our centers."
PV Mall hurt by vacancies
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