Will the US achieve “a soft landing” under Jerome Powell’s leadership …? Too early to tell, but it is extraordinary that the US economy (the largest) continues to grow while having the lowest inflation (CPI 3.1%) amongst the G-7. Paraphrasing Chairman Jerome Powell, while inflation may be falling, prices are still above what they were a few years ago. “That is something that people don’t like.” (WSJ) How is Colorado and Arizona’s economy?
Colorado and Arizona are marching along with projected single-digit GDP growth in Q3 and Q4 of 2023. Unemployment rates are still at historic lows, and consumer sentiment is rebounding, which bodes well for both states. Some of the headwinds in front of us are the climbing vacancy rates in the office sector, which are 22.9% in Denver and 27.2% in Phoenix, and the mounting consumer debt. To combat the increasing vacancies rates, building operators in the office sector are becoming even more innovative on how to utilize and rent out the excess space. (See article https://www.haynesmechanical.com/media/news/office-space-trends/)
Industrial vacancies rates are also increasing, but that is more cyclical in nature. Given, it takes time for the markets to absorb all the new industrial construction. In summary, in the short-term, both sectors the office and industrial space in Colorado and Arizona will continue to experience some turbulence. Economists cannot project when the bleeding will cease but agree that they will rebound in the upcoming years-considering-the macroeconomies of both Colorado and Arizona continue to attract talent in the labor market and viable businesses.
https://www.cushmanwakefield.com/en/united-states/insights
https://www.us.jll.com/en/trends-and-insights/research/office-market-statistics-trends/phoenix
