Report shines a light on future development trends

The Business Journal of Phoenix - March 30, 2007

 

Colliers International, one of Phoenix's largest commercial real estate brokerages, released its first in-depth forecast of what the Valley will look like in the year 2020.

The "2020 Vision" report was distributed to about 175 clients March 28 at an event modeled after a mini-trade show at the company's Phoenix office.

It took a little more than six months to generate the report, which outlines market data and trends in 18 categories. The information will be updated as information warrants on a new Web site, www.colliers2020vision.com.

"This is the first event like this that has occurred in commercial real estate here," said Mike Fitz-Gerald, managing director of Colliers International, Greater Phoenix. "The market is so large and (has) changed so dramatically that we've gone interactive. We're giving our clients data for their particular micro-area."

Colliers is in the process of trademarking the term "Micro-Area Partnerships" to reflect a greater focus on smaller submarkets. It already has trademarked the term "Competitive Circle," which officials say refers to comparisons of like properties in a tighter radius than traditional industry practices.

The days are over for comparing commercial real estate properties spread across the Valley because smaller geographical and economic submarkets are subject to different dynamics, Fitz-Gerald said.

"A building built in downtown Phoenix has no bearing on the market in Mesa. You have to look at specific submarkets. That's the perspective that our clients want," he said. "The idea is not to look at the past, but to focus on the future, which is critical in this market."

Pete Bolton, senior managing director for CB Richard Ellis in Phoenix, said he expects his competitor's report to make for "good reading, and it will be interesting to see what others' ideas are."

But, he added, "There are too many things you can't predict. We used to do five-year planning, but we don't do that anymore. There's so much change in the marketplace that we've cut our reports back to a three-year focus."

Colliers, however, believes it has uncovered unexpected insights that will provide direction and best practices that will benefit Phoenix development.

"The parallel of what's happening in downtown Phoenix and in downtown Baltimore just jumped out at us," Fitz-Gerald said.

Each of those cities has two universities, with a major emphasis on medicine and bioscience; a major league ballpark; a children's museum; city, county and state offices; and chunks of vacant and redevelopable land.

If the University of Arizona College of Medicine evolves into a top-ranked medical program, its downtown campus will have a profound effect on urban core development.

As such, Colliers estimates "an additional 2 million square feet will need to be constructed in the next three to five years to conservatively handle the demand from educational, medical, research and biotech companies, learning institutions and residential."

Downtown housing will become a hot commodity, according to the report, as doctors and biotech professionals choose to live close to teaching hospitals and emerging research centers.

Highlights of Colliers International's 13-year forecast:

• About 50 percent of the growth will be in the West Valley, where developers are master planning more than 50 square miles west of the White Tank Mountains.
• Downtown Phoenix and the area near 24th Street and Camelback Road will continue to be the locations of choice for Class A office space in the future. But Class A development also will continue to evolve into the North Scottsdale Airpark and Deer Valley areas, around the Glendale sports complexes, and in the Williams Gateway area.
• Interstate 17 is a corridor of infill opportunities. Older, existing products that no longer are efficient or functional will be torn down or remodeled into new products that serve the needs of the market.
• Williams Gateway may well become the East Valley's version of Southern California's Inland Empire, an area that boasts one of the most robust economies in the United States. Many investors have begun to invest billions of dollars on this very idea.