Los AngelesThe cycle is mature—so mature that many are predicting a recession in the next 12 months. The mature cycle has meant peak pricing in many top markets, and as a result, investors have fled to secondary markets to chase yield, and Phoenix has been a favorite. In prior cycles, Phoenix has been a final play before a downturn hit, but this time, things may be different.

“One of my real estate investor buddies once said to me, ‘Phoenix, where California money goes to die at the end of every real estate cycle.’ There is no doubt that historically Phoenix has been a boom and bust market,” Alex Zikakis, president and founder of Capstone Advisors, tells GlobeSt.com. “Many late stage investors got hurt in Phoenix during the last downturn. However, with the historically low cap rates in the far western U.S. markets, capital has now moved back to Phoenix in search of yield.”

The high and sustained competition has come with a price—or at least a higher price. ”The activity has made the buying opportunities more competitive and cap rates have dropped substantially over the last 4 to 5 years,” says Zikakis. “I believe we have done a very good job of acquiring high-quality assets in strong locations at attractive pricing in this market.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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