PICOR Connect | Trends in Commercial Real Estate

Last week, Cushman & Wakefield | PICOR principal and office properties specialist Rick Kleiner joined the Back to Business Radio Show and Podcast on KVOI, the Voice, in Tucson. Hosts Rob Davidson and Alan Miklofsky had an exchange with Rick about such topics as the impact of COVID-19 on various sectors of the Tucson commercial real estate market, including office and medical, industrial, retail and multi-family properties.

Yesterday, the U.S. government announced a phased plan for reopening the economy. Over the next several weeks and months, as areas stabilize from the COVID-19 pandemic and stay-at-home restrictions are lifted, organizations will begin to bring workers back into the physical workplace. As many media outlets reported, Cushman & Wakefield recently launched its Recovery Readiness Task Force (RRTF) and have plans to share best practices for reopening workplaces. 

It's been a couple of weeks since we updated you on "business as unusual" at Cushman & Wakefield | PICOR. With daily changes in guidance from every level of government and deeper understanding of our responsibilities to support health at the human, property, and community levels, we have continued to flex, too.

When the going gets tough, the tough get flexible! Our resilient team of Tucson commercial brokers, property managers, and support staff are weathering these strange days with good humor and a service-first mentality.

"We face unprecedented and uncertain times because of COVID-19. However, the Chamber has been here for 123 years, and we intend to be here to lead businesses for another century. For this reason, based on available information, we emphatically believe it is in the best interests of the community, our restaurants and the employees that work in these establishments, to modify their operations to takeout and delivery only. In a meeting led by Mayor Regina Romero, including Vice-Mayor Paul Cunningham, our members, restaurateurs, Visit Tucson and the Pima County Health Department, this recommendation was strongly advocated for by the Chamber. Restaurants are regulated on having strong health and safety standards and they have been amplified during this crisis. Mayor Romero has called a Local Emergency to go in effect tonight at 8:00 p.m., to maintain public health. Dining rooms in restaurants, bars and food courts will be closed. Mayor Romero stated, “My top priority, above all else, is to protect public health. This is a painful decision that I do not take lightly. Our restaurants and small businesses need clear, uniform direction, and this order provides them exactly that.”

On Sunday, November 17, 2019, we lost our brother, partner, friend, and teammate Russ Hall. Mercifully, his heart stopped quickly at the end of a day well lived in a place he loved.  Not only was he a giant in the business and a perennial top producer, Russ shared everything he had, and his heart worked overtime every day. Everything has its limits, and Russ gave of himself until it just gave out. We simply weren't ready... Ten days earlier, when we asked our team what they were grateful for, Russ replied with this:

"Am blessed to walk in to an office everyday where you consider all 50 people among your best friends.  Personally so thankful for my faith, survival of my little family, Health and all the wonderful blessings we hopefully never take for granted." 

Investment property value is a function of net operating income, and controlling expenses is impactful to any investor’s returns.  With a managed portfolio of about three million square feet (sf), Cushman & Wakefield | PICOR tracks operating costs by type of property and over time, identifying trends and opportunities.

The Tucson industrial market remained strong at midyear, as evidenced by our primary metric: Vacancy rate. Once again, vacancy has ticked-down, this time to 5.1%. Echoing the comments last quarter, Tucson is experiencing a “plateau effect” in the industrial sector in that the dynamic run-up in absorption slowed as the market leveled off at a highly-occupied equilibrium. 

The Tucson Metro Chamber wrote the legislative bill SB 1248: property taxes; valuation; property modifications, which was sponsored by Arizona State Senator Vince Leach. Governor Doug Ducey signed the bill on June 7, 2019.