Insights from Experts: Larry Pobuda & Other NAIOP AZ Leaders Discuss CRE in AZ

Larry Pobuda, Senior Vice President & General Manager
Years with Opus: 3
Project Credits: 7th Street (Tempe) Mixed-Use Development and Opus Airport Industrial
Event: NAIOP AZ Leader's Roundtable
Key Coverage: Looking Back and Moving Forward [AZ RE Magazine]

Larry's Responses to Questions Posed to the Roundtable

Q: How he would you compare the metro Phoenix CRE market to other major markets in the U.S.?

Larry: Overall, very healthy, yet very young. Metro Phoenix is evolving and in many ways represents a pleasant surprise for folks who might have other preconceived ideas. This seems to be especially true of Silicon Valley technology companies that might initially invest in Phoenix for backroom/support functions, but they find the talent pool is capable of much more that back office work. As compared to other west coast markets, we are not Seattle or San Francisco, yet we are carving our own unique path. I believe that one of the unique calling cards for Phoenix will be its strategy geographic location. Sharing boarders with California and Mexico—the 8th and 13th largest economies in the world, respectively—makes for endless possibilities. 

Q: Where does Arizona stand in its economic development plans?

Larry: The focus on education is spot on; it's been Arizona's Achilles heel for far too long and we need to solve it. This is one of the most important elements in any economic development strategy—an educated and well-trained workforce. We are planting education seeds today that will take a long time to germinate. In addition to education, the focus on infill development is exciting—people moving into the city to take advantage of neighborhood restaurants, cultural amenities and transit choices. Roosevelt Row and Downtown Tempe are two great examples. 

Q: Has Downtown Phoenix finally turned the corner? Do you believe a viable downtown is essential to our city's success?

Larry: I'm not sure I think of it in terms of "turning a corner" as much as I think it as analogous to moving from adolescence to adulthood, and yes, I think we're all happy to be moving into this next phase. The City of Phoenix has been smart to focus on economic development initiatives that center on making downtown more livable and inviting for businesses and residents alike. Is a viable downtown essential to our city's success? Is a strong core essential to an overall fitness plan? Strong arms and legs don't go with a weak core—a strong core is essential. 

Q: Is the Phoenix market still ripe for speculative building? If so, where and what type of building?

Larry: Yes, selectively, with strong consideration for the best locations with the most compelling points of difference. Spec development by its very nature is risky, and any spec development decision is predicated on demographics, location factors, workforce analysis, capital markets, investor interest, tenant demand, etc. Overall, I think Phoenix will continue to see spec development in the coming year in both the industrial and office sectors. 

Q: Where is the hottest submarket right now and where will be the next?

Larry: Depends on what product type you are talking about, yet the best news is that there is increasing strength Valley-wide, which is different from a few years back. The multifamily explosion was largely centered in the East Valley but that is changing. Other commercial development that has been more East Valley centric is starting to shin in the West Valley, too. And at the heart of it, is a strengthening Phoenix with success in all areas—industrial, office, multifamily and healthcare.