RealtyHop last month released its 2021 list of the in the nation and one of them was from Arizona.

on the list is Arizona鈥檚 zip code in Paradise Valley. The Paradise Valley zip code had a 12.88% increase in the median listing price from 2020 to 2021. The median listing price in 2020 for 85253 jumped from $2.299 million to $2.595 million.  

Arizona statewide real estate and property values performed exceptionally well. According to the , Metro Phoenix was ranked tops in the nation when it came to home price growth with an outstanding 33% year-over-year gain, a full 13% higher than the national average of 19.8%. 

, a data analyst for Realty Hop who published the study for the second year in a row, pointed out the effects Covid had on real estate growth. Because many have adopted either a completely virtual work environment or hybrid work environment, many have chosen to move to their dream cities where they will feel more comfortable spending time at home; one of the cities many people seem to have their sights set on happens to be Phoenix. 

Hybrid and virtual work environments reduce the hours and expense of commuting,  creating more financial stability and the ability to afford larger homes in nicer areas. As migration increases, prices in housing did as well. 

Only 11 states made the list this year, with the them being in California. Sixty three zip codes from California are on the list, followed by 20 in New York and five in New Jersey. The zip code that holds the number one spot is Atherton, , in California with a in 2021 of $8.95 million.

California may have made the top of the list, but in the next few years this could change due to the large number of businesses choosing to leave California. conducted a seven-year study that monitored where these businesses are choosing to go, with  Arizona registering as the third most popular destination. The study shows that more than $68 billion in capital was diverted form California companies, with Arizona as the largest beneficiary of that divestment. 
鈥淩eal estate seems to be stable, and more people are moving to the state than leaving,” said , president of SKC Strategies and executive vice president of business development for .”More businesses are moving to Arizona because of the favorable business environment and the relatively low cost of living.”

Author: Flannery Sloan, Arizona Junior Fellow

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In a welcome signal for the Phoenix region鈥檚 economic recovery, industrial development projects will continue to heat up over the next year and beyond with the hottest market in the West Valley, leading experts told the real estate community Friday.  

While retail construction is down because of COVID-19, a large consumer shift to e-commerce shopping has revved up demand for warehouses, distribution centers, manufacturing facilities, data centers, and more, they said at a virtual 鈥渂reakfast鈥� meeting of the nonprofit Valley Partnership, the voice of the real estate industry in the region. 

Phoenix metro is benefiting greatly from the high demand, they said. One reason is its optimal location. About 35 million consumers live within one day鈥檚 driving time of the Valley.  

鈥淎midst the pandemic, new industrial projects continue to be announced which demonstrates how the Valley is well-positioned to land major deals,鈥� said Cheryl Lombard, CEO and president of the nonprofit organization that has been holding a series of free webinars to offer updates, guidance and information for businesses as they navigate the pandemic.

鈥淰alue added鈥� benefits of the Valley

Three of the state鈥檚 leading experts in commercial real estate were featured speakers: Kevin Czerwinski, president and principal of Merit Partners; Jenna Borcherding, director of development for VanTrust Real Estate; and Tony Lydon, managing director of JLL.

All mentioned the many 鈥渧alue added鈥� benefits that will continue to lure investors here. At the top of the list are more affordable housing and lower income taxes than other large markets. 

鈥淢any of our occupants and operators come to Arizona because they know we can save them 30 to 40 percent in operating costs than if they go to some of the higher tax, higher regulated states in the region; that鈥檚 a big advantage for us,鈥� said Lydon, of JLL, a world leader in commercial real estate services. 

Many other benefits include a large growing population base for potential workers, weather that rarely results in brownouts or blackouts, tax incentives for database centers, and less government red tape.

Phoenix metro could set record in 2021 for industrial construction聽聽

As a result, the metro region will see no slowdown in activity next year, Lydon and the others said.  

The numbers back them up. 

About 11.8 million square feet of industrial development is underway, which accounts for 3.2 percent of the market’s existing inventory, ranking Phoenix among the top 10 industrial markets for construction, according to an international provider of information, analytics and online marketplaces for commercial real estate. 

In fact, new supply is expected to set record highs in 2021, CoStar reports. Developers are on track to deliver an estimated 14.8 million square feet of industrial space this year, more than double the new supply that came on line last year.  

Merit Partners ramping up projects聽

A chunk of that will come from Merit Partners, Arizona鈥檚 largest developer of industrial real estate.

The West Valley is home to 7.5 million square feet of Merit developments in build to suit and speculative projects with a value of about $650 million, said Czerwinski, who detailed the construction coming online this quarter and next year.  

In August, Merit, which has built much of the Red Bull and White Claw facilities in Glendale, purchased a $1.5 billion piece of property for a logistics park development in the city. The industrial portion will be called Camelback 303. 

Merit has five developments under construction that will amount to about 3.6 million square feet that will value about $500 million, much of it along the 303 corridor. 

The West Valley鈥檚 major freeway corridors and interchanges make easy access to California and Mexico international ports for the state鈥檚 growing list of companies that are part of global supply chains.    

Supportive city leaders in the West Valley have helped ensure projects are successful, said  Czerwinski, who predicts much of the property in the region will be fully committed in the coming  years.

Valley is still underbuilt聽

For now, there is still room to grow.

鈥淲e鈥檝e had an incredible year and it鈥檚 not over yet,鈥� said Lydon, who gave an overview of the market. 

Currently, Phoenix has 350 million square feet of industrial base, with 150 million square feet in the West Valley including along the ever growing 303 freeway corridor. 

Borcherding, of VanTrust Real Estate, a national developer of industrial and multifamily projects, said vacant land is one of the reasons her company has been expanding into the Phoenix market. 

Van Trust has several projects planned for this year and next including large spec projects near the Loop 303 in Glendale. 

Much of the company鈥檚 31 million square feet of development has been in the Las Vegas region in recent years. But vacant land is getting harder to find there, she said.  

鈥淭he good news for Phoenix is there aren鈥檛 a lot of parcels over 20 acres in north Vegas. That will bode well for us in the Valley,鈥� Borcherding said. 

The event, Rise of Logistics Efficiencies in the Valley鈥揟he Hottest Industrial Projects, was sponsored by the Arizona Commerce Authority. 

For more information about the webinar series, visit:  

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