ANNUAL OUTLOOK COMPANIES TO WATCH THE TOP TEN ISSUES AFFECTING REAL ESTATE 2017-18 Political Polarization and Global Uncertainty The Technology Boom Generational Disruption Retail Disruption Infrastructure Investment Housing: The Big Mismatch Lost Decades of the Middle Class Real Estate’s Emerging Role in Health Care Immigration Climate Change Source: The Counselors of Real Estate
HOUSING: MULTIFAMILY & SINGLE-FAMILY In 2017, rising home prices, mortgage accessibility, economic growth and more multifamily developments helped improve housing affordability and access, but the disparity between housing needs and housing supply will remain a concern in 2018. On the multifamily side, 2017 concluded with more than 17,000-units under construction in Greater Phoenix and over 11,000 more units planned for 2018 across 56 properties. Jim Pierson, senior vice president of Walker & Dunlop, says, people are for the most part still bullish on multifamily but new developments going forward will need to moderate on build-outs, amenities and price per square-foot. “The biggest issue is getting the deals financed,” he adds. In terms of multifamily sales, Thomas Brophy, research director at ABI Multifamily, says, “Large institutional players are all back in the Valley looking for buys and, in my eyes, is a harbinger of what 2018 will be like.” He predicts Downtown Phoenix and Tempe will continue to be the hottest multifamily submarkets, but also foresees more 34 | January-February 2018
boutique, garden-style apartment communities gaining traction in submarkets just outside of the urban cores like Queen Creek and Northwest Phoenix. As for single-family homes, Craig Krumwiede, president and CEO of Harvard Investments, says, despite some labor and land issues, the housing market feels good and all the indicators are up year-over-year from 2016. Lending has loosened, more permits and entitlements are being approved and a new singlefamily rental trend is catching the attention of the developers. Krumwiede says, over 20 singlefamily rental projects are already being planned for the West Valley, which closed on 10-12-acre infill sites and are attracting capital. “This is going to happen and it’s going to affect garden-style apartments that would otherwise go up in those more suburban areas,” he explains. “How it affects the single-family for sale market, I don’t know.” Meanwhile, more traditional for rent single-family communities, or detached condo-type communities, are being built in Verrado and Eastmark, which rank as two of the top-selling masterplan communities in the country.
ALLIANCE RESIDENTIAL COMPANY: The seventh largest multifamily manager in the U.S. remains bullish on the multifamily market after 2017 when it built over 7,000 apartment homes across more than 20 communities nationwide within urban cores like Greater Phoenix, which is now home to seven luxury multifamily communities and includes the current construction of Broadstone Roosevelt Row and Broadstone Lakeside. ARCHER WESTERN CONSTRUCTION: It’s part of The Walsh Group, a 119-year-old family-owned general contracting firm, specializing in the water, transportation, civil and building sectors. At a planned expansion and upgrade project of the White Tanks Regional Water Treatment Plant, Archer Western is installing a CoMag system for a drinking water facility – the first of its kind in the nation. It uses magnetite to settle chemical floc up to 30 times faster than conventional treatments while extending equipment service life. ATMOSPHERE COMMERCIAL INTERIORS: Founded in Phoenix in 1919, the company opened a new showroom and worklab in the Roosevelt Row District of Downtown Phoenix in late 2016 and a West Elm Workspace showroom on the second floor in 2017. Housed in a former Packard showroom, the environment is designed to nurture physical, cognitive and emotional well-being, and is thoughtfully aligned with its organizational purpose to provide optimal climate for engagement. BERRY RIDDELL, LLC: The zoning and land use firm is working on game-changing developments across the Valley, which most recently included securing multifamily entitlements at the base of South Mountain for Grayhawk and guiding Maracay through the site plan approval process in the same area. The firm is known for its success in zoning and staffs two urban planners for assisting with approval processes. BLACK MOUNTAIN INVESTMENT COMPANY: The privately held investment firm, led by a group of executives and directors who are all investors in the company, exists to provide investors with reliable returns from a diversified portfolio of assets. Black Mountain has grown into an investment firm with a $18 billion portfolio, which includes national aerospace companies, commercial real estate centers, a construction company, various debt instruments, single-family residential holdings, land for future development and equity in a real-estate brokerage.