George Bliss & Joan Krueger
Principal & Director, Bliss Realty & Investment
Real estate investing is an old and cherished method of moving real estate. Investors exist in both the residential and commercial real estate arenas. But, at least in the commercial world, the investment scenario, while it may look different than before the Great Recession, has both opportunities and challenges in Arizona today.
The entrepreneurial investor is eager and energized. Having gained the ability from the Recession, or waited until it was safe to come out of the shadows, the entrepreneurial investor may be working alone or with a group who find a project to rescue, restore, or begin, and then put together the money to do it. They are part of a circle of individuals or entities whose purpose is the same but aren’t holding a single pile of cash. Projects are identified, money is gathered, and work begins.
Conventional investment tools such as REITs, Investment Groups, and Limited Partnerships still exist and are hard at work. So, what brings them to Arizona? We know the East Valley is prime for new commercial real estate investments. According to the Greater Phoenix Economic Council (GPEC), we can offer substantial infrastructure: access, utilities, etc., as well as a streamlined entitlement process. Clearly the demand is there for office and industrial uses. As of June 30th, 2017 there were 78 prospects identified by GPEC, with half of them requiring more than 200,000 square feet of space.
Public Private Partnerships are also alive and well as evidenced by business at Phoenix Mesa Gateway Airport. The airport owns the property surrounding the terminal and run/taxiways, and provides ground leases to aeronautically-tilted businesses and more. The Airport is currently in negotiations for a 360-acre development project with a multi-national consortium on airport-owned land. Shea Joachim, Business Development Director for the Airport indicates the project represents a capital investment of more than $500 million. The popularity of this methodology is supported by GPEC. The true Public-Private-Partnership taking place in greater Phoenix is why economic developers feel the region continues to be on the radar for so many companies during their site selection evaluation.
Professionals in real estate and economic development continue to highlight the triumphs and losses regarding Arizona’s ability to attract them. One reason heard from existing businesses looking for investors to help them grow is a lack of financial backing. According to the Gilbert Chamber of Commerce, export and manufacturing businesses indicate that financial institutions are not lending and/or providing a line of credit unless the company has a minimum of $5M in sales.
According to GPEC, there is a demand for nearly 50 million square feet of new development in the pipeline for the greater Phoenix area, representing over $13 billion in capital investment potential.
Thanks to the help from our state economic development organizations like GPEC, Arizona Commerce Authority and municipal Economic Development Departments, Arizona remains on the radar for investors of all types. We think the future looks bright for investment and economic development in the state of Arizona.