2016 Year End Market Summary
Metro Phoenix Multi-Tenant Shopping Centers (10,000–100,000 SF)
Rein Retail Report • Mark Rein • Rein & Grossoehme
The 2016 market recorded 116 sales totaling $684.5 million and 4.00 million square feet. Average sale price rose to $5.90 million (range $200,000 to $52 million), average size was 34,486 SF, and average price per square foot climbed to $188.81. Cap rates compressed to an average of 7.14 percent (2.91–11.1 percent), occupancy improved slightly to 76.3 percent, and average rent per foot was $13.47. Net absorption in the centers that sold reached 163,479 SF. Volume declined modestly from 2015, but pricing and total dollar volume both moved higher.
Compared with 2015, the number of sales fell 7 percent while total volume rose 29 percent and price per square foot increased 33 percent. Cap rates moved lower even as the Federal Reserve continued its gradual rate-hike cycle. The relationship held: as the cost of capital began to rise, higher-quality assets still commanded tighter yields. The spread between long-term commercial mortgage rates and cap rates remained workable for leveraged buyers, supporting the stronger pricing seen in 2016.
Overall, 2016 marked a clear step up in quality and pricing power. Fewer centers traded, but those that did sold at meaningfully higher prices per foot and tighter cap rates. The market was beginning to differentiate more sharply between average and better-located product.
Refer to the Rein Retail Report for more data & statistics.
Data source: CoStar. Sales of multi-tenant shopping centers from 10,000 to 100,000 sq. ft.
Mark Rein • Selling Shopping Centers Since 1981
480.214.9414 • Mark@RGcre.com