Phoenix posts impressive second quarter

Phoenix's commercial real estate market has been boosted by foreign investment.

The Phoenix metropolitan statistical area experienced an increase in foreign investment during the second quarter, which put it into the top-10 markets in the country for the measurement, according to a report from Jones Lang LaSalle.

Much of this occurred because of the city's large amount of unoccupied commercial properties, as well as its affordable prices. Typically, the city has experienced significant investment from Canadian property management companies, but investors from Europe, Asia and the Middle East recently began purchasing property, as well, The Arizona Republic reported, citing Jones Lang LaSalle's Global Capital Flows Report. The foreign investment has given a marked boost in the MSAs commercial market, as it has struggled to show positive signs since the economic downturn started in 2008.

"In the past, Phoenix has not been a magnet for offshore investment," Dennis Desmond, senior managing director of Jones Lang LaSalle in Phoenix, told the news source. "It's a great sign for Phoenix to see that type of interest from offshore investors."

The area had approximately $317 million in foreign investment during the second quarter, the report explained. This bumped the city into the 10th spot on the list, still far behind New York and San Francisco, as these two cities finished one and two with $1 billion and $685 million in foreign investment, respectively.

Phoenix's investment was led by two major purchases from Artis REIT, a commercial real estate company from Winnipeg, according to the report. The company purchased two office properties during the second quarter for $79 million and $75 million. This equated to approximately half of all foreign investment during that period.

Since January 2010, Phoenix has seen 11 commercial real estate transactions of $10 million or more which were funded by foreign investment, the report noted. The reason for this may be due to the financial crisis in the eurozone, which has forced some investors to look at cities in the U.S.

"Anybody can show up here and buy a piece of real estate and have the same ownership rights as a U.S. citizen," Mark Stapp, director of the Master of Real Estate Development program at Arizona State University, told the news source.

Stapp added that there is a chance that this foreign investment may have a negative effect, as it can take more money from the local economy than it puts in.

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