Investors Focus on Single-Tenant Retail Assets in Phoenix

PHOENIX, AZ— The Phoenix retail market softened during the first half of the year, with tenant demand failing to keep pace with completions, according to a third-quarter Retail Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

Sellers have begun to realign their expectations in recent months, which has result in higher cap rates, especially in deals involving older properties.

“In the coming months, investor demand for single-tenant properties is expected to remain healthy, although cap rates for all retail properties will likely edge higher,” says David Guido, regional manager of the Phoenix office of Marcus & Millichap.

Following are some of the most significant aspects of the Phoenix Retail Research Report:

· Employers in the Phoenix metro are forecast to eliminate 18,000 jobs this year for a 0.9 percent reduction, following an increase of 0.2 percent in 2007.

· Developers are on pace to complete roughly 7.5 million square feet of new retail space in 2008, in line with last year’s deliveries.

· Vacancy is projected to end the year at 10. 3 percent, up 220 basis points from 2007.

· Asking rents are predicted to reach $19.48 per square foot, a 0.6 percent increase.

· Concessions will rise through the rest of the year, causing effective rents to decline 0.3 percent to $17.26 per square foot.

For a copy of the complete Phoenix Retail Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.

Press Contact: Stacey Corso, Communications Department, (925) 953-1716