market report...sublet space. • net absorption: fell further into negative levels. • office...
TRANSCRIPT
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///////////////Los Angeles/////////////
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///////////Orange County///////////
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////////////Ventura/////////////////
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////////// I n land Empi re ////////////
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/////////////Phoenix/////////////////
///////////////////////////////////////// Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has
not been verified and no express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted
subject to errors, omissions, changes of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
Q3 | 2020
Market Report ///////// Phoenix Office
KEY TAKE AWAYS MARKET ACTIVITY ECONOMIC OUTLOOK
Direct Vacancy
D
Net Absorption
Overall Vacancy
V
Gross Absorption
Under Construction
Sale Price Change
Rental Rates (FSG)
Deal Volume
U.S. Employment U6 Rate
Interest Rate Changing GDP
Port Traffic Y/Y Δ NYSE Performance
Inflation Change 10 Yr. - 2 Yr. Spread
MARKET
REPORT
EXPERIENCE IN A CHANGING MARKET
@DAUMCOMMERCIAL /////////////////////////////////////////
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no express representation is made nor is any to be
implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
14.8% -219,107 SF
15.7% 1,882,106 SF
1,188,055 SF
8.8%
$2.32
37.8%
Q3
Office 2020 Phoenix
MARKET
• Vacancy Rate: Overall vacancy increased by 30 BPS
to 15.7% largely due to an increased amount of
sublet space.
• Net Absorption: Fell further into negative levels.
• Office Supply: 230K SF was delivered in Q3. Under
construction increased to 1.18M SF.
• Leasing Activity: Fell by 1% from Q2 setting a new
record low for activity.
• Sales: In Q3, the median price PSF was $192.64.
Volume was down 37.8% from Q2.
ECONOMIC OUTLOOK
• GDP: Q2 finished slightly better than estimates, but
still worst on record with a -31.4% contraction.
Estimates for Q3 show growth of over 20% as
economies continue opening up.
• Employment: The unemployment rate continues to
decline, but the employment situation is bleak for
millions of Americans as thousands of business are
permanently closing, leaving more than 20M jobless.
• Economic Relief : A new round of much needed
economic stimulus is working its way through
congress. The HEROES Act is another $2.2 Trillion
stimulus proposal. Included in it is a 2nd round of PPP
funding that will be targeted more to small
businesses that continue to struggle.
7.9% 12.8%
2.9% (30 year fixed) 24.3%
-11.8% 9.0%
1.32% 56 BPS
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///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
Q3
OVERALL VACANCY
INCREASED BY 30 BPS IN Q3 TO 15.7%
GROSS ABORPTION
FELL BY 10.7% FROM Q2 TO BELOW 2.1M SF
NET ABSORPTION DIRECT TURNED POSITIVE. OVERALL NEGATIVE DUE TO INFLUX OF SUBLET SF
ASKING RENTS
INCREASED BY $0.01 PSF IN Q3 TO $2.32
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Direct Vacancy Total Vacancy Historical Average
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Net Absorption SF Direct Overall Vacancy
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Gross Absorption SF Total Historical Average
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
$0.20
$0.70
$1.20
$1.70
$2.20
$2.70
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Office Gross Rent Direct Overall Vacancy
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///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
CONSTRUCTION ACTIVITY
230K SF WAS DELIVERED IN Q3. UC UP TO 1.18M SF
LEASING ACTIVITY
DOWN 1% FROM Q2 TO LOWEST TRACKED LEVELS
SALES THE MEDIAN PRICE IN Q3 WAS $192.64 PSF. VOLUME DOWN 37.8%
Q3
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Leasing Activity SF Direct Leasing Activity SF Sublet
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Under Construction SF
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
$1,400,000,000
200
12
00
22
00
32
00
42
00
52
00
6
200
72
00
82
00
92
01
02
01
12
01
22
01
3
201
42
01
52
01
62
01
72
01
82
01
92
02
0
Sales Volume Med. Price PSF
Linear (Med. Price PSF)
Ph
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///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
VACANCY BREAKDOWN SQUARE FOOT BREAKDOWN– 132,905,860 SF MARKET SIZE
VOLUME BREAKDOWN AVERAGE RENT PSF
Q3
11%
15%
11%
22%4%
14%
0%
18%
5% Airport
Central Corridor
East Phoenix
East Valley
North Phoenix
NW Phoenix
Pinal County
Scottsdale
West Phoenix
14
.38
%
16
.70
%
15
.12
%
12
.18
%
15
.88
%
19
.36
%
10
.10
%
13
.29
%
11
.98
%
15
.63
%
17
.41
%
16
.18
%
12
.69
%
16
.45
%
21
.12
%
10
.10
%
14
.21
%
13
.03
%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Direct Vacancy Rate Overall Vacancy Rate
$1.97$2.28
$2.63 $2.77
$2.33
$1.91
$1.33
$2.59
$2.11
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
Average Office Rent FSG
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$0.00
$10,000,000.00
$20,000,000.00
$30,000,000.00
$40,000,000.00
$50,000,000.00
$60,000,000.00
Sales Volume Price PSF
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///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
METHODOLOGY
& TERMINOLOGY
Methodology
Non-Owner occupied, multi-
tenant office buildings that are
30,000 square feet & greater.
Direct Vacant SF
Space that is vacant and ready
for occupancy by a user. The
space is being offered for lease
or sale directly from the landlord.
Total Vacant W/ Sublet SF
Space that is vacant and ready
for occupancy by a user. The
space is being offered for lease
or sale by the landlord or for
sublease by the current tenant.
Direct Vacancy Rate
Total vacant direct space
(vacant space for lease or sale
from the landlord or owner)
divided by the total rentable
square footage for existing
buildings only.
Vacancy W/ Sublet Rate
Total vacant direct space and
sublease space divided by the
total rentable square footage for
existing buildings only.
Gross Absorption
The total change in occupied
space over a given period of
time, counting space that is
occupied but not space that is
vacated by tenants. Gross
absorption differs from leasing
activity, which is the sum of all
space leased over a certain
period of time.
Net Absorption
The net change in occupied
space over a given period of
time, calculated by summing
all the positive changes in
occupancy (move ins) and
subtracting all the negative
changes in occupancy
(move outs).
Under Construction
Planned buildings for which
construction has started but
have not yet been granted
a Certificate of Occupancy.
Planned buildings are
not included.
Completed in 2020
New buildings with original
construction completed in
the year 2020 and granted
a Certificate of Occupancy.
Renovated buildings are
not included
LOS ANGELES, CALIFORNIA
801 S. Figueroa Street, Suite 600
Los Angeles, CA 90017 213-626-9101
LOS ANGELES NORTH, CALIFORNIA
21820 Burbank Boulevard, Suite 201
Woodland Hills, CA 91367
818-887-3600
SANTA CLARITA VALLEY, CALIFORNIA
28494 Westinghouse Place, Suite 312
Valencia, CA 91355
661-705-2299
SAN GABRIEL VALLEY, CALIFORNIA
13181 Crossroads Pkwy. N, Suite 100
City of Industry, CA 91746 562-695-7244
SOUTH BAY, CALIFORNIA
1025 W. 190th Street, Suite 420
Gardena, CA 90248
310-538-6700
MID-COUNTIES, CALIFORNIA
13810 Cerritos Corporate Drive, Suite C
Cerritos, CA 90703
562-207-3300
ORANGE COUNTY, CALIFORNIA
4400 MacArthur
Boulevard, Suite 950 Newport Beach, CA 92660
949-724-1900
VENTURA & SANTA BARBARA, CALIFORNIA
751 Daily Drive, Suite 105 Camarillo, CA 93010
805-987-8866
INLAND EMPIRE, CALIFORNIA
3595 E. Inland Empire Boulevard, Bldg. 5
Ontario, CA 91764
909-980-1234
PHOENIX ARIZONA
1702 E. Highland Avenue, Suite 120
Phoenix, AZ 85016
602-957-7300
DAUM OFFICES
Q3
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///////////////Los Angeles/////////////
/////////////////////////////////////////
///////////Orange County///////////
/////////////////////////////////////////
////////////Ventura/////////////////
/////////////////////////////////////////
////////// I n land Empi re ////////////
/////////////////////////////////////////
/////////////Phoenix/////////////////
///////////////////////////////////////// Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has
not been verified and no express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted
subject to errors, omissions, changes of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
Economic Overview
///////// Q3 2020
Na
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///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
PORT ACTIVITY INCREASED 6.6% IN Q2 FROM Q1 GDP IN Q2 FINISHED AT -34.4%. Q3 EST. TO GROW AT 24.3%
THE IMPACT FROM COVID-19 SHOWING SLOW SIGNS OF JOB RECOVERY
Q3
-40%
-30%
-20%
-10%
0%
10%
20%
30%
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Real GDP Average Real GDP
*24.3% for 3Q20 based on CNBC/Moody’s Analytics Rapid Update Survey
LEISURE & HOSPITALITY SHOWS GROWTH AS RESTRICTIONS BEGIN TO EASE
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
'20'19'18'17'16'15'14'13'12'11'10'09
Imports Exports Empties
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Recession U6 Rate Official Rate
-13
74
143
10
658
203
4
42
78
439
429
1,094
264
486
-2,000 0 2,000
Government
Other Services
Leisure and Hospitality
Education and Health Services
Professional and Business Services
Financial Activities
Information
Utilities
Transportation and Warehousing
Retail Trade
Wholesale Trade
Manufacturing
Construction
Mining and Logging
Na
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Ov
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iew
//// Q
3 2
02
0
///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
10-2 YEAR BOND SPREAD INCREASED AGAIN IN Q3 THE STOCK MARKET CONTINUES TO RISE
CPI REMAINS BELOW TARGET BUT PICKING UP THE FEDERAL RESERVE CUT THE FED FUNDS RATE TO 0.0-0.25%
Q3
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Recession CPI All Item
Less Food & Energy Fed Inflation Target
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
'00'01'02'03'04'05'06'07'08'09'10'11'12'13'14'15'16'17'18'19'20
Recessions 10-Yr Treasury Rates
Federal Funds Rate 30-Yr. Fixed Rate Mortgage
-150%
-100%
-50%
0%
50%
100%
150%
200%
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Recession DOW Jones S&P 500 NASDAQ
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
'00'01'02'03'04'05'06'07'08'09'10'11'12'13'14'15'16'17'18'19'20
Recession Bond Spread