As we enter 2022, the effects of the COVID pandemic are gradually receding and the economy’s on a growth and recovery trajectory. The US economy is slated to grow at nearly 4 percent through next year, the fastest it has grown in over 15 years. Businesses across the country are looking to get back on their feet, and prospective homeowners are out on the hunt for residential properties.
Arizona’s no different in this respect, and is in fact one of the spearheads for US economic growth this year. The state’s property market is on the rebound. According to a Zillow report, the Phoenix residential property market saw 17.1 percent growth in home values, the highest year-on-year increase of any major US metro. Much of this growth can be attributed to young people moving into the city, looking for quality housing at more affordable rates than SoCal.
Demand for commercial properties is also very strong: as a matter of fact, industrial property saw record demand in 2020, with the net absorption rate up by 11 million square feet right through the pandemic, and with strong growth continuing into the current year.
What does all of this mean if you’re in the real estate market? Right now is the best possible time to get a hard money loan for Phoenix multi-use properties.
With strong growth in both commercial and residential sectors, multi-use properties are at an intersection in market demand.
Potential Phoenix homeowners are looking for sustainable and affordable housing, while businesses and investors are looking at commercial spaces that’ll help them maximize ROI. Multi-use properties provide an opportunity to maximize your footprint in both residential and commercial sectors which gives you a chance to take part in the growth story. Hard money lenders in Phoenix, like Colonial, want to take your ideas and catapult them into tangible projects.
Why are Multi-use Properties Hot Right Now?
Market demand for mixed-use buildings is hot right now. Before capitalizing on that, it’s a good idea to understand exactly why this is the case. Let’s take a look now at some of the key reasons:
- Post-pandemic consumer behavior changes
- Greater retail foot traffic
Walkability is a major reason why both businesses and homeowners are keen on Phoenix’s multi-use properties. While strict lockdowns may no longer be in place, shoppers are still keen to avoid spending more time outside than necessary. Apart from this, the COVID couch potato effect is very real. Even given the opportunity to be out and about safely, an increasing number of people prefer to stay home or, at the least, limit their time spent away from their domain.
In this context, walkability is a very important factor for home and apartment owners: people want access to restaurants, shops, and other services within easy walking distance, without being out and about too much.
We expect to see growth in vertical multi-use planning. This could be because vertically planned multi-use buildings allow people to access many of the services they need (food, coffee, haircuts, nail salon, pharmacies, etc.) without ever having to leave their building.
Less is More: Customer Behavior Changes
Changes in consumer behavior are another major factor behind the rise in Phoenix multi-use properties today. During the pandemic and lockdowns, many businesses transitioned to home delivery-based service models. This meant that, especially in sectors like retail and food, customer experiences changed dramatically. Laid-back in-person retail store visits were replaced by Shopify-powered e-purchases, and sit-down restaurants transitioning into delivery outlets.
With lockdown restrictions no longer in effect, customers are free to visit stores and restaurants just as before. However, changes in consumer behavior from last year aren’t necessarily going anywhere. Online shopping and home delivery have, in many ways, conditioned customers to expect – and even prefer – instant gratification and faster service over more laid back, traditional experiences.
What does this mean for multi-use real estate, though? We expect greater interest in these properties from shop and restaurant owners over the next several months, as opposed to larger, single-purpose structures. Store owners have a few new focuses:
- Save on operating costs in smaller, lower footage outlets in multi-use buildings
- Pivot their home delivery capabilities
- Deliver a no-frills, “in-and-out” shopping experience that is more in line with current customer expectations
Optimizing square footage is a win-win here – store owners save more, and the experience they offer is more in line with customer expectations – and higher commercial demand means a higher price per square foot for real estate players.
Greater Foot Traffic
While many people are still apt to stay at home, the lifting of lockdown restrictions means that people are out and about more than before, though many prefer staying relatively close to home. Mixed-use facilities make it even easier for store owners to capture these eyeballs.
In a horizontally planned mixed-use development, for instance, residents will be walking back and forth from the residential area to office and commercial sections, essentially a “captive audience” for in-store and on-the-street promotions. As people start emerging from their homes again, mixed-use buildings are effortlessly positioned to draw regular crowds of customers to the vicinity of stores and restaurants they might be interested in visiting.
How Should You Use a Hard Money Loan to Capitalize on Phoenix’s Multi-use Property Boom?
Mixed use properties are set to be a major growth area in 2022, but how can you leverage an Arizona loan to get in on the action? Here are a couple possibilities that Colonial can support you with:
- Renovations to your existing properties and converting to mixed use
- Fix and flip loans for new properties
Renovating and converting your existing properties to cater to multi-use tenants is a great way to get started. A hard money loan from Colonial Capital can help you cover the costs of converting an old commercial or residential property on your hands into multi use real estate, drawing store and home owners alike. (any specific renovations we can talk about here? Do we need to talk about rezoning etc?)
Another solid option is to get a fix and flip loan for a new property. Trustee sale properties are a great option here, often getting you a great deal at significantly below market price. With our short turnaround times on loans, Colonial Capital can help you get the cash you need on time to win a competitive trustee sale auction and get started on multi use renovations.
We have no shortage of experience in helping real estate partners get into the multi- use space. (Would love to bring in any example of a current or past Colonial Capital multi use property loan)
With the pandemic winding down, the Phoenix property market is registering a strong rebound, both in the commercial and residential sectors. This is a time of immense opportunity for developers looking to tap into the demand and take advantage of property prices that are set to increase significantly over the next year. By catering to both commercial and residential users, multi use properties are among the best options to invest in right now. Reach out to Colonial today at (602) 224-0745. We’re hard money lenders in Phoenix and we can help you get a quick, competitive fix and flip or renovation loan to hop into the multi-use space.