2017 Year End Market Summary
Metro Phoenix Multi-Tenant Shopping Centers (10,000–100,000 SF)
Rein Retail Report • Mark Rein • Rein & Grossoehme
The 2017 market recorded 92 sales totaling $450.9 million and 2.82 million square feet. Average sale price was $4.90 million (range $632,819 to $25.75 million), average size was 30,634 SF, and average price per square foot reached $190.43. Cap rates averaged 7.27 percent (4.07–11.25 percent), occupancy improved to 79.7 percent, and average rent per foot was $12.41. Net absorption in the centers that sold was a strong 225,652 SF. Transaction count and total volume both declined from 2016, while pricing held relatively steady.
Compared with 2016, the number of sales fell 21 percent and total volume dropped 34 percent. Price per square foot was essentially flat, while cap rates moved slightly higher. The Federal Reserve continued raising rates through 2017, and the modest expansion in cap rates tracked that increase in the cost of capital. The spread between long-term commercial mortgage rates and cap rates remained functional but tighter than in the earlier low-rate years, limiting some leveraged demand.
Overall, 2017 was a more selective year. Fewer centers traded, total square footage declined, and the market showed early signs of rate sensitivity. Occupancy continued to improve and net absorption stayed positive, but the drop in volume signaled that buyers were becoming more cautious as interest rates rose.
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