Best of Living in Scottsdale & Phoenix Arizona Newsletter
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🔥 Phoenix Economy Shines, Midtown Overhaul, & Millennial Homeownership

🔥 Phoenix Economy Shines, Midtown Overhaul, & Millennial Homeownership

Check out what's shaping Phoenix and Scottsdale's economy right now.

Josh Zuniga
February 08, 2024

Happy Thursday!

There are a lot of fantastic things happening in the Phoenix economy as 2024 heats up.

We have been ranked #1 in the nation for manufacturing growth, and are set to get over 40 new major facilities in the area. We are also getting a cool new multi-use development in midtown that is going to transform the area.

We are also taking a look at how millennials are faring with home ownership, the current interest rates, and the real estate market in general.

— Josh

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🏭 Phoenix ranked No. 1 in the nation for manufacturing growth

Driving the news: Phoenix has emerged as the leading market for manufacturing growth in the United States.

The Newmark Group Inc., a global real estate firm, ranked Metro Phoenix at the top of its list for the 15 largest projected job gains in manufacturing.

This ascension is backed by at least 14 significant announcements in the region since 2020, signaling a substantial shift in the city's industrial landscape.

Details: This accolade comes amidst nearly 15,500 jobs promised through major manufacturing developments, a number that surpasses other national markets in both projected job additions and manufacturing announcements exceeding $100 million.

Historically known for companies like Intel and Honeywell, Phoenix's advanced manufacturing sector has been growing for over 50 years.

This foundation has attracted new investments from tech giants such as Taiwan Semiconductor Manufacturing Co. and LG Energy Solution.

The city's business-friendly climate, economic opportunities, and less expensive power are key factors driving this growth.

By the numbers: The average size of mega investments in Phoenix is 1.45 million square feet. In contrast, the average manufacturing lease sits at about 45,000 square feet, reflecting the city's broad appeal to both large and small-scale manufacturers.

Why it matters: Phoenix's surge in manufacturing growth underscores a broader resurgence of the sector in the U.S.

This trend not only bolsters the local economy but also diversifies the region's industrial capabilities, moving away from its past focus on call centers and insurance firms.

Between the lines: The shift towards a more diverse economy, supported by a robust network of universities and community colleges, has been pivotal in attracting new companies to Phoenix.

This transition is part of a strategic effort by local leaders to foster sustainable growth and quality-of-life improvements.

What’s next: The Phoenix metro area's large labor pool and proximity to major markets with R&D systems will continue to draw employers.

The bottom line: Phoenix's manufacturing growth is not just a local phenomenon but a part of a larger national trend.

With high-tech sectors like semiconductors and biomanufacturing driving this growth, Phoenix is poised to maintain its top position in the U.S. manufacturing landscape for the foreseeable future.

🧱 Phoenix City Council OKs plans for The Central Park mixed-use project

What’s happening: Following a series of public meetings, plans for The Central Park in Midtown — a project that has been years in the making — have received approval from Phoenix City Council

Driving the news: The Central Park project is set to feature 1,450 residential units, 78,000 square feet of retail and restaurant space, including a grocery store, and 245,000 square feet of office space.

An open space plaza will serve as the heart of the development, enhancing the urban landscape.

Why it matters: The project's approval marks a major step in urban development for Phoenix.

It emphasizes the city's focus on mixed-use spaces, aiming to create a vibrant, multi-functional urban area that serves various community needs.

The big picture: The Central Park is adjacent to Steele Indian School Park, positioning it as a key urban hub.

Its development includes extensive residential, commercial, and public spaces, reflecting a modern approach to city planning.

What’s next: With the Council's approval, the next steps involve finalizing the project's timeline and construction details.

The bottom line: The Central Park project represents a significant advancement in Phoenix's urban landscape, showcasing the city's commitment to innovative and inclusive urban development.

This project is poised to become a central feature of Midtown Phoenix, offering a unique blend of residential, commercial, and public spaces.

🎥 The Reverse Housing Crash of 2024 Helps Buyers Briefly: Phoenix AZ Market Forecast

It's finally easier to buy a home in Phoenix AZ! But what does that mean for the housing market in 2024? And what does that mean for you if you are considering a move to Phoenix? We are diving into all of that today in this video so that you can make the best decision!

💸 The biggest barriers to homebuying for Millennials

Driving the news: A new report from Real Estate Witch identifies high interest rates as the primary barrier to homeownership for millennials.

This trend persists despite recent progress in the housing market towards increased affordability.

Details: The report reveals interesting data about millennials and how their financial relationships to homeownership.

Financial barriers are widespread, with 95% of millennials facing difficulties in homeownership. Over half (57%) carry debts exceeding $10K, and nearly half (47%) plan to make down payments of less than 20%.

50% of millennials cite interest rates as their top obstacle, followed by high home prices (46%) and difficulty in saving for a down payment (42%).

A notable 67% express regret over not buying homes when rates were lower.

While 96% of millennials admit that high interest rates have affected their homebuying plans, a resilient 78% are still open to purchasing homes at rates exceeding 7%. Most plan to refinance if rates decrease.

Why it matters: These findings highlight the challenges millennials face in the current real estate landscape, marked by high interest rates and escalating home prices.

The situation underscores the evolving dynamics of the housing market and its impact on younger buyers.

Between the lines: Millennials are increasingly willing to compromise, with many open to buying homes with significant issues like asbestos (67%) or mold (62%).

This willingness to accept less-than-ideal conditions reveals the pressure to enter the housing market.

What’s next: Despite financial barriers and market uncertainties, millennials are exploring various strategies to achieve homeownership.

These include taking on additional jobs, moving to more affordable areas, and even renting out parts of their future homes.

The bottom line: The struggle for homeownership among millennials mirrors broader economic challenges and changing market conditions.

Their experiences offer insights into the evolving narrative of the American Dream in the context of modern real estate realities.

📅 2024 Phoenix Projects to Watch

Driving the news: The Phoenix Business Journal has highlighted an extensive list of 43 key development projects set to transform the Valley's real estate and economic landscape.

These projects encompass residential, commercial, industrial, and entertainment developments.

Over $40 billion in investments is expected for two semiconductor facilities alone.

Details: These projects are grouped into 4 categories based on their timelines:

Group 1: Set to deliver this year includes high-profile projects like the One Camelback office-to-residential conversion and Nestlé's new manufacturing plant.
Group 2: Could deliver in next 1-5 years features diverse developments like Procter & Gamble's manufacturing plant, North Scottsdale's One Scottsdale mixed-use development, and Amkor's Peoria chip facility.
Group 3: Long-term projects focus on major investments in the semiconductor industry and expansive mixed-use developments like Tempe's South Pier.
Group 4: Still up in the air covers proposed projects with uncertain timelines, including hydrogen plants and film production hubs.

Why it matters: These projects are set to create thousands of jobs, drive significant economic growth, and redefine the landscape of Phoenix, signaling a dynamic shift in the region's industrial and commercial sectors.

The big picture: The diversity of these developments, from manufacturing plants to luxury residential complexes, showcases the Valley's growing appeal as a hub for diverse industries and its capacity to accommodate large-scale, futuristic projects.

What’s next: As these projects progress, they will undoubtedly influence the Valley's economic trajectory, potentially attracting more investments and further diversifying the local economy.

The bottom line: The scope and variety of these development projects underscore Phoenix's emergence as a significant player in national economic and industrial growth, offering a window into the future of urban development and industry diversification.

The outlook for Phoenix’s economic future is very strong.

📊 Market Insights

The housing market in Phoenix is somewhat competitive due to inventory being so low. Here’s what the data is telling us this month:

Data shows that home prices are up 8.5% compared to last year.
The median sales price for Phoenix homes is $445K.
The median price per square foot is $278.
Some homes are getting multiple offers and spending ~45 days on the market.

If you are looking to buy a home in this market, new construction is a great option that I highly recommend if you want to avoid competing with other offers.

You’ll want to have a good search and offer strategy when looking for existing homes and be patient because it could take a while to find the right one at your desired price point.