COMMUNITY INVESTOR
SPOTLIGHT: PHOENIX/TUCSON
PHOENIX/TUCSON RESOURCES: Arizona Real Estate Investors Association
does not compare to pre-recession levels. In 2016, just over 7 percent of home sales in Phoenix were flips, up 0.8 percent since 2015. In 2005, more than one in every 10 sales was a flip. Ash, who also is involved with in- vestors on the flipping side of the mar- ket, said that his investors are starting to consider holding at least some of their investment properties as rentals, but “thanks to local job growth, if they want to sell, they don’t have to hold properties on the market long. One of our biggest investors currently has an average days-on-market of fewer than 14 days before an accepted offer in Pinal County.” With numbers like that, the urge to get in and start buying, fixing and reselling may be hard to resist for many investors. Before making that decision, however, take a deep dive into local markets. Phoenix and, to a degree, Tucson are both highly localized, even more so than most real estate markets. Median home price for the Phoenix area is nearly $250,000, but some ZIP codes boast average values that are much, much higher. These neighborhoods can experience their own mini-boom- and-bust cycles independently of the rest of the area, and some local experts are warning that areas with relatively lower average home values may, in fact, be offer- ing essentially the same type of housing and local income levels as their more expensive neighbors. “When Phoenix comes out of a recession, historically it just takes off,” noted Vost, adding that in her experi- ence, investors should be careful in any Phoenix micro-market because, in the past, Phoenix has gone into recessions relatively quickly. That could render a flipping strategy in today’s market a bit riskier than cash-flowing rental acquisi- tion, since demand is already high and the market is definitely already hot. However, Phoenix and Tucson clearly learned from the last housing crash and
Tucson will be completely connected, much like Los Angeles and San Diego,” Ash added. In addition to courting high-tech firms (and their employees) from around the world, the Sun Corridor at large and the Phoenix-Tucson Corridor in partic- ular are prime examples of constantly growing infrastructure that’s designed to support present and future economic growth. For example, public and private companies are working together to ex- pand an already-dominant rail line into one of the largest rail parks and logistics facilities in the western United States. The Phoenix-Mesa Gateway Airport also appropriated nearly $25 million for capital improvements in 2015 to better ca- ter to national and international travelers coming to the area for work and tourism. “There are so many big developments coming in this area, including Phoe- nixMart, which is an exposition show- case modeled after a similar develop- ment in Dubai; a Lucid plant (Lucid is a direct competitor to Tesla); and an entire development called Dreamport Villages that would include a 1,500-acre theme park, an extreme sports park, a wildlife park and extensive multiuse develop- ment for restaurants, retail and office space,” said Ash. He added that, once approved, the Dreamport development alone will bring in about 5,000 jobs just during Phase I, while PhoenixMart projects a total of 5,000 to 6,000 jobs in Pinal County along the Phoenix-Tucson Corridor. He also noted that Lucid opted for Arizona over other competing locales thanks to $46 million in milestone-based subsidies offered by the state government, just one indication of the pro-business attitude at the state level. HAS FLIPPING BEEN FORGOTTEN? At present, the flipping market in Phoenix is still very active, although it
Arizona is an extremely attractive area for these types of relocations because international companies are looking for affordable cost of living, low taxes, low levels of regulation, and sunshine,” explained area investor Meghan Vost. Vost and her husband operate a high-end corporate housing franchise, AvenueW- est Phoenix, in metro Phoenix. With only about 18 percent of the state available for building facilities and expanding housing offerings, the Phoe- nix and Tucson areas are by far the most densely developed areas in the state, and both municipal and state planning agencies have to work in tandem to cre- ate opportunities for sustained growth. Thus, we see the creation of multiple tech-focused developments, such as the University of Arizona’s Tech Park
in Tucson, which boasts 40 companies – including IBM and Raytheon – in resi- dence and more on the way. It generates a $1.7 billion annual contribution to the local economy. Another good example is the Phoenix-Tucson Corridor, a subset of southern Arizona’s larger Sun Corridor, developed in large part by Sun Corridor Inc. along Interstate 10 and, more recent- ly, by the state along proposed Interstate 11. I-11 will tentatively run from No- gales, Arizona, to Reno, Nevada, another emerging high-tech hub thanks to Tesla’s planned Gigafactory in that city. The Phoenix-Tucson Corridor, also known to locals as the Pinal County Corridor, is home to myriad high-tech businesses with a concentration of firms focused on biosciences, aerospace and unmanned aerial systems, and high-tech
manufacturing. Jobs like these, which tend to earn average wages of more than twice local county averages, are reliable drivers of employment and population growth. Assuming there is somewhere to expand, there’s a good chance that expansion will continue in the area. That expansion will be well-supported, and local investors and developers are not worried about whether or not there will be room to grow in Arizona. “There are lots of tribal lands, but there is definitely still room,” said Jacob Ash, CEO of RentVest, a property management company with nearly 2,000 homes under management. RentVest specializes in turnkey rental acquisition and management in the greater Phoenix and Tucson areas. “We think that within the next 10 to 15 years, Phoenix and
(AZREIA) azreia.org
Phoenix Real Estate Club phoenixrealestateclub.com American Rental Property Owners & Landlords Association (ARPOLA) arpola.org Greater Phoenix Chamber of Commerce phoenixchamber.com Tucson Metro Chamber tucsonchamber.org Arizona Indian Gaming Association (AIGA) azindiangaming.org
Phoenix Convention Center phoenixconventioncenter.com Tucson Convention Center tucsonconventioncenter.com Phoenix Travel & Tourism visitphoenix.com Tucson Travel & Tourism visittucson.org RealtyTrac realtytrac.com | (800) 550-4802
MOVING ‘FORWARD’ WITH THE GREATER PHOENIX CHAMBER OF COMMERCE
have actively, aggressively created an economic ecosystem that is inherently disinclined to this type of rapid market change in the future. Tech jobs, by their very nature, bolster a local economy and insulate it from larger economic shifts both because these jobs are high-pay- ing and in high demand no matter the national economy, but also because they create and sustain so many other em- ployment opportunities from hospitality to business to finance. Thanks to dedicated, thoughtful plan- ning in the years since the housing crash, Phoenix and Tucson are poised for grand growth in the Grand Canyon State, start- ing (and continuing) now. •
O ne indicator that an investment is a stable one is when the area where that investment is located is actively and effectively supported by local legislation, regulation and initiative. The Greater Phoenix Chamber of Commerce is one such example of an effective growth supporter and generator, thanks in large part to its “Phoenix Forward” initiative, which it describes as a “coordinated, strategic approach to economic development that brings the resources of our collaborative partnerships … to the front doors of business.” The chamber has participated in attracting and supporting the following projects and businesses, among many others: 101 HEALTHCARE LLC , a $30 million, 200,000-square- foot health care campus development in Glendale. WEBPT , a Phoenix startup providing cloud-based elec- tronic medical records services for physical therapists and their practices. The company was founded in 2008 and now serves 8,000 rehab therapy clinics and 60,000 members. THE BIOSCIENCE ROADMAP , a collaborative effort
intended to position Arizona as a globally competitive national leader in the biosciences by 2025. Features include multiorganizational collab- oration on cancer treatments among
Phoenix health care providers, local tech- nology companies and Arizona State Univer- sity researchers; and the Phoenix Biomedical Campus, a $1.3-billion annual contributor to the local economy involving a collaboration among three state universities, a number of local hospitals and genetic research non- profit TGen. SKY HARBOR INTERNATIONAL AIRPORT EXPANSION , a move supported by Phoenix Forward that involved a $150 million remodel on Terminal 3. It will enable the airport to expand flight offerings at the already-busy transportation hub. Sky Harbor has a $79 million daily economic impact, according to the chamber, and is one of the 10 busiest airports for passenger traffic in the country.
Carole VanSickle Ellis is the host of Real Estate Investing Today, a daily nine-minute investing podcast, and the editor of the Bryan Ellis Investing Letter. Contact her at editor@bryanellis.com or visit www.selfdirected.org.
72 | think realty magazine may :: june 2017
thinkrealty . com | 73
Made with FlippingBook - Online Brochure Maker