Middle Market Digest: This Week in Southwest

Development in the Southwest markets is still hot. This week, three projects were reported out of the Southwest: Long Beach City College’s $25 million renovation to an on-campus entertainment facility; Desert Mountains’ development of a luxury housing community in Phoenix; and Decron Properties $10 million renovation of the 440-unit garden apartment community Reserve. But, it wasn’t only development and redevelopment projects fueling the industry this week. There were some major trades. Namely, KBS Strategic Opportunity REIT’s $147 million acquisition of City Tower in Orange County. The class-A office tower is the third largest building in Orange County, and a significant trophy asset. Here’s a look at this week’s trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.

BY THE NUMBERS

PHOENIX—Phoenix recovered all jobs lost during the Great Recession. Since 2007, the metro has added 100,800 more jobs, an increase of 5.3%. The market placed among the top 10 metros for employment growth in 2017 with 44,400 new jobs. Unemployment dipped to 3.9%, just below the national rate of 4.1%, after reaching a high of 10.4% in 2007. Among the eight employment sectors that recorded job gains last year, leisure and hospitality–which includes accommodation, food services, entertainment and arts jobs–recorded the most significant bump in employment. The sector added 90,000 more jobs than during its pre-recession level, indicating a boost in tourism and increased consumer spending that also benefits retailers. Though the growth in employment during 2017 was widespread, certain sectors have grown faster than others throughout the recovery. Because of this, the Phoenix economy is much different today than it was a decade ago. This shift has led to Phoenix slowly moving away from a dependency on construction, which accounted for 9.2% of jobs in 2007. That sector now accounts for only 5.4% of all jobs, despite healthy growth in 2017. Meanwhile, current office-using employment is 50,000 jobs above its previous pre-recession peak, bolstering office-leasing activity in the region. In 2017, Phoenix was second in the nation for net absorption, totaling 2.8 million square feet.