The spread of COVID-19 and the resulting government restrictions precipitated a pronounced decline in commercial real estate investment activity in the region. Investment volumes for the Phoenix metropolitan area in 2020 totaled $9.0 billion, a 20% decline from 2019 levels.
The decline in investment activity was most pronounced in late spring as investors pressed pause in the face of a rapidly changing macroeconomic landscape. Trading resumed in earnest in the second half of the year, and September, October and December volumes exceeded 2019 levels (by 37%, 31%, and 6% respectively). Activity throughout the year was driven by capital interest in favored asset classes, especially industrial. An increase in consumer reliance on online shopping made industrial warehouse space invaluable to major e-commerce players—further driving demand and value across the region. Industrial properties generated $1.9 billion in investment volumes for 2020—up 45%, or $0.6 billion from the year prior—and faring considerably better compared to other commercial asset classes. Industrial’s share of total activity was 20%, up from 12% in 2019.
Overall investment volumes fell 20% year-over-year in Phoenix,¹ but the rebound in the last quarter of the year exceeded 2019 levels.
- Note: Investment totals exclude portfolio sales.
Source: Real Capital Analytics (RCA); CBRE Research, 2021.
With a growing reliance on e-commerce due to social distancing restrictions, industrial assets fared comparatively well in year-over-year volumes–increasing over half a billion dollars, or 45%, from the year prior.
Source: Real Capital Analytics (RCA); CBRE Research, 20