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The Arizona economy ended 2018 on a strong note with GDP growth up 3.4 percent in Q4.

May 2019 AZ Economic Outlook

May 13, 2019
By Robert A. Dye, Ph.D., Daniel Sanabria

Sunny Outlook for Arizona’s Economy

The Arizona economy ended 2018 on a strong note with GDP growth up 3.4 percent in Q4. For the full year 2018, Arizona GDP was up 4.0 percent, making Arizona the fourth fastest growing state economy in the U.S. last year. Job growth slowed somewhat in the first quarter of 2019 as employment in accommodations and food services declined by 2,300 jobs in Q1. The state’s important tourism industry was hurt in Q1 by bad weather and by the longest ever federal government shutdown. The closure of national parks and recreation facilities may have spilled over to state parks as well, which posted year-over-year declines in visitations in January and February. However, Arizona continues to be well positioned to benefit from an ongoing expansion of the overall U.S. economy this year. Arizona tends to benefit from its low cost of living and business friendly environment as the overall U.S. economic expansion matures. Strong inflows of people and businesses are driving up real estate demand in the Phoenix area. RealPage noted that Phoenix area apartment rental prices were up 7.4 percent in 2018 which was about two times the national average. Apartment occupancy for the Phoenix area was at 95.4 percent last year. Office space is also seeing a boost from the inflow of businesses. According to Colliers International, the Phoenix market saw net absorption of office space climb to 850,000 square feet in Q1. This was enough to push the Phoenix office market vacancy rate down to 13.6 percent. Industrial space, which includes warehousing and manufacturing, saw the vacancy rate tighten to a low 7.2 percent in Q1.

For a PDF version of this report, click here: May 2019 AZ Economic Outlook

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