Most of the core metrics in Southern Arizona’s real estate market continued to improve during July, at a slow and steady pace. This scenario appears to be the most likely trend for the rest of 2013 in all the market’s sub-sectors.
Trends. Statistics. Movement. That is the Scorecard’s mission, to outline a broader, more
comprehensive perspective of the region’s overall real estate and housing market. To that end, this issue carries expanded coverage of mortgage rates and commercial real estate.
Mortgage rate data is a key addition as it relates to the federal government’s “quantitative easing” monetary policy. In reality, this program has created mortgage rates that are artificially low and historically abnormal.
The new Mortgage Rates Scorecard is provided by Randy Hotchkiss of Hotchkiss Financial, who also serves on the Southern Arizona Mortgage Lenders Association (SAMLA) board of directors.
The local economy is still adjusting to the broad financial impact of higher payroll taxes to fund Social Security and the federal spending cuts known as sequestration.
To shed some light on this, this issue includes some multi-family and industrial info since these areas are affected by less discretionary consumer income and reduced government business. This data is courtesy of Chapman Lindsey Commercial Real Estate Service and Cushman & Wakefield | PICOR.
As our overall market gains momentum, one can’t help but wonder how much fiscal “drag” has been created by the fiscal cliff…
~ TAR CEO Philip Tedesco, RCE, CAE
Send comments to phil@tucsonrealtors.org
Multi-Family and Student Housing
With over 40,000 students invading the University of Arizona campus this month, is there a real estate topic more timely than student housing?
After a decade of under-construction in the multifamily sector, the wave of new construction catchup will run through 2014. Although a large number of units are planned, most indicators show that the market will be able to absorb the new inventory.
About 1,770 units are in construction with 2,454 more planned through the end of 2014. Of these, 933 units are student housing and 3,052 are market-rate properties.
The increase in private-sector student housing benefits the UA in three key ways: it reduces the shortage of beds; adds high-quality, amenity heavy housing that helps attract more out-of-state students (i.e. higher tuition); and enables the UA to use its borrowing capacity for new educational and research buildings.
Overall, the vacancy rate for the entire multi-family sector at the 2013-2Q end was the lowest of any second quarter since 2008, ending at 9.4%. The average monthly rent, excluding utilities, was 86-cents/square foot.
Industrial Sector
The year-to-date net absorption is 254,212 SF, setting an 11.4% vacancy rate compared to 12.4% in 2013-2Q. Currently, there is 39.1 million SF of industrial space in the market with another 11,394 SF under construction.
For the past 18 months, average rental rates have been basically flat. For the first time since March 2007, the sector had three consecutive quarters of positive absorption. Some late softening was noted however, as the local industrial sector is still adjusting to fiscal drag due to higher payroll taxes that began in January and federal spending cuts
(sequestration) that began in March.
Source: Cushman & Wakefield | PICOR: (520) 748-7100
