Arizona has consistently been among the top five fastest-growing states in the nation. Aptly so, it’s no surprise that despite the economic impact that the pandemic has played across the nation, the state has remained on track, continuing to be a leader in economic growth. Currently fifth in the nation for highest growth, its GDP reached a historic high of $334.03 billion in Q1 2021, as shared in research from Forbes Magazine.
According to noteworthy experts in the field, among them one of the nation’s top economists Dr. Christopher Thornberg of independent research firm Beacon Economics, this upward trajectory will continue into 2022 as the state continues to grow at an accelerated pace across all sectors of the economy.
Commercial Real Estate
Prior to the pandemic, the commercial real estate sector was strong and stable. As economists analyze current data, there is a resounding sentiment that Arizona will continue to see an acceleration of trends that were already in place.
A lot of this is due in large part to the many companies, especially those in the industrial sector, which are relocating to Arizona. In Maricopa County alone, the work of the Greater Phoenix Economic Council has helped drive more than 20 companies to the Valley, which have brought with them more than $510 million in capital investments and over 5,000 high-paying jobs, according to the figures CEO Chris Camacho shared at an Economic Forum hosted by Alliance Bank. And with these jobs comes the demand for housing, which is being seen in construction permitting that has increased in both Maricopa and Pima Counties, and expected to continue growing through 2022, which is explored in the most recent Regional Intelligence Report from Alliance Bank.
One sector most challenged by the past 18 months has been retail. The National Retail Federation recently revised its outlook for the year with expectations of national sales growing between 10.5% and 13.5%. The growth reflects the strength of the economy, and in Arizona, the desire to get back to a semblance of pre-pandemic live-work-play normalcy.
E-commerce has seen a stead uptick as an extraordinary number of shoppers turned to online shopping during the pandemic. This trend is expected to continue being seen through 2022 as customers embrace the ease and convenience of click-based shopping from the comfort of their homes.
Combined with this outlook, developers have been looking at how to align services with the way shoppers’ lifestyles have changed, with many of them transitioning properties to a mixed-use format that positions retail, grocery, restaurants, multi-family and office to coexist within a redevelopment.
Other Sectors Expected to Drive the Economy in 2022
Led by the expansion of e-commerce driven by the convenience of shopping from home, retail stores, third-party logistics businesses and warehouses continue to grow and expand. In particular, the warehouse and distribution sector is being propelled forward by customers’ reliance on e-commerce, which economists predict will continue to be in high demand, especially as online sales continue to grow into next year.
As well, healthcare is experiencing a business-as-usual approach despite the Delta surge. Economists, including Dr. Thornberg, are pointing to a significant rebound by way of increased appointments, screenings and non-essential procedures taking place – the results of which are currently being seen – well into 2022 as people return to their pre-pandemic healthcare routines.
Manufacturing has also seen strong growth as the state become an epicenter for technology manufacturing in the southwest. The sector’s growth is producing high-wage jobs and drawing skilled talent from across the nation, which reciprocally builds demand in both the commercial and residential real estate sectors.
As 2021 draws to a close, economists are buoyed by recent reports about the strength of Arizona’s economy. With the V-shaped recovery officially complete and the level of economic output returning to its long-run sustainable growth path, economists anticipate that 2022 is on track to be a banner year for the state.
Don Garner is chief executive officer of Alliance Bank of Arizona. For more information, visit alliancebankofarizona.com. Statistics and data summaries sourced from Alliance Bank of Arizona’s Regional Intelligence Reports. For an in-depth summary insights and statistics developed by Beacon Economics, visit https://www.westernalliancebancorporation.com/alliance-bank-of-arizona-home/about-alliance-bank-of-arizona-home/insights/insights-details/2021-phoenix-economic-forum.