2024 IREM | CCIM Economic Forecast Recap

Key takeaway:  Overall, the Arizona real estate market is expected to experience slower growth in 2024 compared to the past 2 years, but will remain largely stable with opportunities and some distress.

Key insights by property type:

Office: Andrew Cheney, CCIM, Andrea Davis, CCIM, George Getz, Michelle Romero, David Verwer, CCIM

Return-to-office trends still evolving, with a preference for smaller, nicer spaces near amenities. Rents rising, vacancy rates moderate.  Tracked office market size +/- 107M SF (does not include owner/user and condo projects).  7M SF of sublease currently on market.  Direct Vacancy is 17.8%.  TI Pricing is close to $85/SF for general office.  Medical TI is double or more.  Distress is coming in the coming year from refinance risk.  Mantra – Nicer and smaller vs Bigger and cheaper.

Multifamily: Adam Parker, Libby Ekre, CPM, Matthew Frank, Scott O’Neill, Anna Sepic

Tight vacancy rates, rent increases slowing with new supply coming online. Interest rate hikes and cost increases put pressure on cap rates. Potential distress sales in 2024.  Still early in the distress market.  Lots of cash buyers are on the sidelines waiting to deploy capital.  Occupancy is at 93% currently.  Cost to turn average is $1,650/unit.  19K new units delivered in 2023; 36k units coming online in 2024.  Expectation is 7k units in 2025, which has been the historic norm.

Industrial: Alex Boles, David Calcaterra, Jason Carlos, Will Strong, Danny Swancey.

Strong demand driven by e-commerce and logistics. Low vacancy rates and rising rents expected.  Phoenix is now at 450M SF of total inventory.  We will surpass 500M SF  in 2024.  That has changed the perception of Phoenix Industrial to a primary market.

Retail:  Nick Miner, CCIM, Rommie Mojahed, Ryan Mojahed, Brian Teske, Jon Yee

Adapting to changing consumer preferences and online shopping. Mixed outlook depending on location and tenant mix.  Overall, vacancy rates are at historic lows and rent growth is still expected.

Keynote:  Danny Court

Soft landing anticipated with no official recession.  There is always the potential for a black swan event, examples include job growth moderating, credit card debt, and inflation remains a concern.

Regional considerations:

Arizona benefits from strong population growth, water availability, and attractive business climate compared to California.  Political issues surrounding water could be a risk factor.


Smaller, high-quality office spaces near amenities.
Industrial warehouses, especially those suitable for e-commerce.
Select multifamily assets in strong submarkets.
1.5% population growth which is about 110K people/year coming to Phoenix
Well located retail properties


Rising interest rates and inflation impacting affordability.
Potential for distress sales in multifamily and office sectors.
Uncertain economic outlook and potential for black swan events.

Overall, the Arizona real estate market and general economy is in a good position to weather any economic headwinds.  If you want to discuss more insights and takeaways from the event or if you want to discuss your specific commercial property, give me a call!