Tag Archives: Investment Opportunities

What Does the Boom in Arizona Multi-Family Housing Say About Where We’re Headed?

It can be a tad confusing. Looking at national news stories about the real estate market as a whole, and making a wise decision about when and where to invest can be daunting. While understanding where the United States is going with respect to financial markets (globally speaking, as well), it’s important to map out a strategy for buying, holding and selling commercial property. Here’s why. The recent boom in Arizona multi-family housing provides eye-opening indicators.

The West Coast May Not Miss the Ocean

Turns out that California residents, business owners and residents are moving out of the Golden State in record numbers. In fact, a top relocation landing point is Phoenix. It isn’t just about the location, moderate weather (except for the summers) and the cost-friendly quality of life. Investors that have long benefited from the high rent rates and exorbitant property values in California are vying for better options, and Arizona real estate is luring them.

Current Administration Put a Cap on Tax Benefits, Affecting Pricier Markets

Owning real estate in Los Angeles, San Jose and San Francisco (just to name a few) isn’t as noteworthy as before. New property tax guidelines are in effect and property owners will finally see the reality that comes with them during this year’s tax filing. Because the maximum allowable deduction for property taxes is now $10,000 and mortgage interest deductions are capped at $750,000 mortgage amounts (for primary and second homes), consumers are rethinking homeownership.

California Multi-Family Property Owners Have a New Nemesis: Prop 10

After years of winning numbers (both in property values and vacancy rates), landlords, equity firms, residential developers and property managers may be seeing the end of a golden era. This month, California commercial property owners and their tenants have the legal forum to air their frustration out at the voting booth. Proposition 10 revisits the Costa-Hawkins Act of 1995, which limited rent control. Property owners benefited while tenants had to accept escalating rent rates. Prop 10, should it pass, will put local municipalities at the helm of deciding where and when rent control comes into play.

The effects of the proposed measure are already widespread. It goes beyond apartment and multiple dwelling owners. The panic surfaced into commercial office owners, as well. Cap rates on commercial in California have dropped, sending investors into “sellmode” while they eye other states to identify properties to purchase before their 1031-Exchange deadlines hit.

Arizona and many cities in the Phoenix metro area are the happy recipients of this real estate migration. But do we have enough supply to meet the forging demand?

When Supply and Demand Are at Odds, Arizona Boomtowns Rise

The National Multifamily Housing Council and National Apartment Association collectively examined the issue, formulating a study that would help distinguish current need, as well as short- and long-term forecasts. Their numbers show a deficit, with 150,302 new apartments needed in greater Phoenix by 2030. That is a 38 percent increase over where the local market sat at the end of 2017.

To break the numbers down deeper, here’s a look at rental and occupancy rates from last year, second quarter.

The following bulleted list should be made into an image please.

  • Class A rent rates – 8.7% increase
  • Classes B rent rates – 6% increase
  • Class C rent rates – 7% increase
  • Occupancy was at 95%

If you’re shuddering at the thought that these market signs look familiar (the horror of revisiting 2008), we’re not the same ol’ Phoenix. Even though our property values have gone up substantially in the last decade, consider where they came from – the bust. In fact, property values are just touching on the height-of-the-bubble pricing, but again, it’s been 10 years since then.

We’re Not Just Made of Resorts and Sports Anymore

Phoenix is a hot market for myriad reasons. Sure, we’re still a destination point for business conferences, conventions, sports, shopping and getting away from everywhere else. We’ve had a decade to think long and hard about how the downturn happened and how to avoid it again.

The Valley of the Sun Has Grown Up

Investing in multi-family and commercial real estate in Phoenix, Gilbert, Mesa, Tempe, Chandler and Scottsdale has led to numerous accolades:

  1. We’re Number 3 in the U.S. for tech industry jobs, according to Money magazine.
  2. New jobs are being created at twice the rate of U.S. overall.
  3. Phoenix metro ranks Number 5 for U.S. cities’ population.
  4. Real estate price points remain relatively low.

The above-referenced points play well into office, retail and industrial markets, as real estate is a cross-connective supply chain of sorts.

For multi-family property owners and those who buy and hold single-family residential, there is a different phenomenon that may have been born, in part, during the economic downturn of the past. And from it, a mentality supported by an odd mix of fear, reality and a desire to live in the moment more than ever before.

The Cultural Shift Behind the Arizona Multi-Family Housing Surge

Talk to a millennial, and even some baby boomers, about personal stability through real estate and you’ll more than likely get a gaff or a snicker. They remember firsthand what it was like to watch a 401K trickle down to less-than-retirement worthy or to give property back to the bank. For some, it’s not easy to shake off and start over.

Many baby boomers are cashing in to any equity they have and living more amongst the masses. They are resurging as multi-family tenants, living the dream of greater amenities without the responsibilities attached. Large, urban sprawls of mid- and high-rise communities are dotting the downtown Phoenix skyline.

Millennials come to multi-family living through a mix of no-where-else-to-go or wouldn’t-have-it-any-other-way. Reasons behind the reluctance to own aren’t all financial, though overbearing student debt is a leading cause.

Multi-Family Rentals Are Attractive:

  • More bells and whistles for the money
  • Greater sense of community
  • Easier commute to work
  • More affordable
  • Turn-key living
  • Less responsibility
  • More freedom

Best Places to Rent and Live in Arizona

Recently, WalletHub compiled data from cities coast to coast, reviewing factors that gauge decisions made by renters that affect how and why they choose to live where they live. From this, the findings dictate specific rankings, such as rental market and affordability, quality of life, and overall assessment of all factors, with “1” being the best, and so forth.

Here’s how our residential tenants rank many of our local areas:

Overall Best Places to Rent in the United States:

  • #1 – Scottsdale
  • #2 – Peoria
  • #3 – Chandler
  • #4 – Gilbert
  • #9 – Mesa
  • #10 – Tempe

Best in Affordability:

  • #7 – Gilbert

Best Quality of Life:

  • #1 – Scottsdale
  • #2 – Peoria
  • #3 – Chandler
  • #9 – Gilbert

Follow the transportation arteries in these cities and wherever municipal monies are increasing infrastructure and further development: That’s the sweet spot for commercial investment.

Has the Real Estate Gravy Train Stopped in the Tracks of 2018?

Permits for new construction have eased and 2018 is projected to take a step back on the multi-family frenzy. Perhaps it’s a move to prevent oversaturation, though the numbers don’t justify the caution. But millennials will pay off their debt someday and settle down with their two dogs, maybe a significant other, and children? A little later than former generations, but it will come. Until then, to the multi-family property owners go the spoils.

Ask About Phoenix Multi-Family Opportunities

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Downtown Mesa: Hotspot for Development and Investing

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A Look at Developments and Investment Opportunities in Downtown Mesa

By Greg Marek

Many people talk about Gilbert’s or Chandler’s downtown’s as the place for real estate opportunities and where things are happening. I believe the real opportunity is in downtown Mesa.

Why is downtown Mesa such a good real estate opportunity? There are several reasons. First, sale and lease prices are still reasonable. Another selling point for Downtown Mesa is light rail, which opened for service in August, 2015. Mesa currently has three stations, with 3 more to be completed by 2018. This has improved the accessibility to Downtown Mesa and thus increased the traffic in the area. Lastly, Mesa uses a form based zoning code for downtown development projects which allows more flexibility for developers. For these reasons, people looking to open a business, investors, and developers are turning their sights to downtown Mesa.

48 W Main St-5932

Two Story Historic Commercial Store Front at Main & Center

A  planned Facade Improvement, which will remove the colonnades that line Main Street is also in the works.  An article featured in the East Valley Tribune  reveals that starting to get rid of the colonnade is a key goal of a new Mesa Program.

“Far from promoting downtown development, the city believes the colonnades actually have hurt. They obscure Main Street’s storefronts, mar the historic architecture of a dozen or more buildings and, in fact, are something of a drain on the city budget.” The article states.

Jeff McVay, Mesa’s manager of downtown transformation, believes the historic preservation, and resulting character, will draw more people downtown.

In addition to 6,000 employees and 380 businesses, downtown Mesa has a growing arts and culture district anchored by the Mesa Arts Center (MAC). The MAC, a performing and visual arts complex with more than 210,000 square feet is the largest comprehensive arts campus in the state. Coming soon is the Mesa Artspace Lofts project at 155 S. Hibbert. Using the proximity of the Mesa Arts Center, this project provides 50 live/work units for artists and their families along with space for non-profit arts organizations and community events. With four museums are all within walking distance of the MAC this arts district, along with light rail, is a major selling point to potential residents, businesses, and investors.

Currently, there are several projects either approved or in the entitlement process, including about 1,500 residential units along the rail corridor from Tempe to Mesa. Recently completed was the renovation and adaptive reuse of the historic 122-year-old Alhambra Hotel, which is listed on the National Register of Historic Places. The developer, Venue Projects and Community Development Partners, built this $3 million project to provide housing for about 60 Benedictine University students.

4 parcel investment or redevelopment opportunity totaling 33,500 SF. Prime location in the Historic Downtown Mesa Historic District. 60' of Main Street frontage and 285' of Morris Street frontage. Existing buildings on property total 14,000 SF of retail/office space.

4 parcel investment or redevelopment opportunity totaling 33,500 SF. Prime location in the Historic Downtown Mesa Historic District. 60′ of Main Street frontage and 285′ of Morris Street frontage. Existing buildings on property total 14,000 SF of retail/office space.

In the entitlement process at the northwest corner of Main St. and Country Club Dr. is a $40 million, 200+ multifamily unit project with 20,000 sf of retail. This project will be a significant entry feature to downtown. Additionally, Sunbelt Holdings, one of the premier developers in the Valley recently purchased the 13-acre former Auto Nation block at the southeast corner of Main St. and Sirrine – preliminary plans for an exciting multi-use development are reportedly being discussed with the City. Furthermore within the last year there has been a run on early to mid century properties by several local investors.

Downtown Mesa Land Assemblage

Downtown Mesa Redevelopment Opportunity: This three parcel redevelopment opportunity is located on E Main Street, 1/2 block east of Center Street in the historic downtown Mesa district. Featuring 268′ of Main Street frontage and within 1/2 block from the Center Street/Main Street light rail station and Mesa Art Center.

Even the blighted 25-acre vacant site at the southwest of Mesa Dr. and University Dr., is available for redevelopment. After extensive input from area residents and businesses, the City is preparing to issue a Request for Proposals to find a developer to build a mixed use project.

If looking for real estate opportunities in the East Valley, don’t overlook downtown Mesa as a hot spot for real estate investment opportunities.


GrGreg 11-28-16eg Marek

Senior Advisor

Greg Marek has over 30 years experience in working with real estate developers, business owners, and investors in both the public and private sectors. As Redevelopment Director for two large Arizona cities, Mr. Marek was involved in complex real estate deals between real estate developers and the city. He also was involved in recruiting businesses and assisting them through the city approval process.

Mr. Marek specializes in retail sales and leasing, tenant representation, land sales, and working with municipalities. Mr. Marek is a member of the Arizona Museum of Natural History Foundation Board and the Mesa Historical Museum Board of Directors.

(480) 610-2400
Cell: 480-250-2038

 COBE Real Estate has downtown Mesa property listings for sale and for lease providing retail, office, and redevelopment opportunities. For more a information on available properties visit : COBE Property Search