Industrial Is the Hottest Net Lease Asset in Phoenix

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Industrial Is the Hottest Net Lease Asset in Phoenix
Industrial Is the Hottest Net Lease Asset in Phoenix

During the pandemic, people traded west coast city life for Phoenix – and investors followed suit. While apartment buildings and build-to-rent housing have attracted the most attention, net leasing investments are also burning, and industry is the most popular net leasing asset class, according to Judi Butterworth, SVP at Orion Investment Real Estate. the trend at GlobeSt.com’s Net Lease Conference on October 28th. “We benefited from the chaos on the west coast,” Butterworth told GlobeSt.com, adding that regulation and taxation are driving people from California, Oregon and Washington to Phoenix. “It’s overwhelming. If you look at net rental buyers, a lot of people come here who sell their California properties and then take the money to Arizona because they lost confidence in California or because everything is too expensive in California. ”Both big institutional players and small family investors are active in the Phoenixes net lease market. Butterworth often works with investors looking to convert California assets into net Phoenix rental property. “A lot of the deals I’ve made are family investors who sold an apartment complex and then the money goes out and they come to Phoenix and trade something else. The easiest way is a net lease investment, ”she explains. Larger investors are mainly concentrating on industrial real estate. “Most of the money goes into industry,” says Butterworth. “Usually it’s a single user. Developments are pre-sold before they are even built. Industrial is the biggest beneficiary from a big money perspective. We get a lot of developers from the Midwest who do speculative developments and still get them pre-sold. It’s that hot. ”Retail is next in terms of popularity. Butterworth says net lease retailing encompasses a wide range of real estate, from large fast food chains to tattoo parlors, due to demand. One reason investors are open to a wide variety of users: the strength of retail through the pandemic. “There are hardly any empty boxes, and the empty ones are taken over by new users,” says Butterworth. “Everything has been replenished, and without Amazon doing any kind of expansion in our market. We had a natural absorption of vacancies. ”The success of Net Lease Assets has brought new investors to the market, increased the pool of buyers and reduced cap rates. “There are too many buyers for too little property,” says Butterworth. “It’s been an interesting 18 months.”

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