On November 15th, Savills Studley Chief Economist Heidi Learner served as guest speaker at AZCREW’s November Luncheon focused on the national and regional economic outlook. Founded in 1985, AZCREW was one of the founding chapters of the Commercial Real Estate Women (CREW) and has more than 90 members today. Ms. Learner’s presentation to the chapter discussed the macroeconomic outlook for Phoenix; Phoenix’s demographics and how the area’s growth compares with other metro regions; and the future of local office and multi-family real estate markets.
With Phoenix’s metro area benefiting from above-average population growth driven by domestic in-migration; above-average employment growth thanks to a dedicated pool of labor for employers provided by active and growing university campuses in the area; and corporate relocations attracted to the live-work-play appeal of Downton Phoenix, Tempe and Scottsdale, is poised to continue its growth trajectory. Phoenix is the U.S.’s sixth largest city by population, largest state capital city and 17th largest metropolitan area economy. Phoenix’s real GDP growth is led by trade and professional services industries. The city has a high percentage of young workers, with 29.9 percent of the population aged 25-44.
As noted in Ms. Learner’s presentation at the Arizona Biltmore Resort, Phoenix net absorption has been positive since Q4 2014 and has 2 million square feet of office space currently under construction. According to the Greater Phoenix Economic Council, Phoenix has on average 33 percent more competitive labor costs than leading California markets; more computer science and software engineering professionals than many major western markets including Austin, Denver, Las Vegas and Salt Lake City; and fast-track permitting. Additionally, Arizona is a right-to-work state with a low-cost operating environment.
“Favorable demographic trends should supporter longer-term investment in office and multi-family real estate, though growth in high-wage jobs has been slow,” Ms. Learner noted in her conclusion.
“Phoenix’s economy will be relatively immune from potential regulatory changes (positive and negative) in the finance and health insurance sectors, though changes in trade and immigration policy could affect the local economy.”