Thanks to its warm climate and low business costs, Phoenix has slowly turned into a magnet for companies relocating from nearby California, pushing healthy demographic trends and boosting housing demand in the process. As a result, rents rose 4.0 percent year-over-year as of April, with further improvement in the cards for the Valley of the Sun.
Phoenix added 60,000 jobs through February, up 2.7 percent year-over-year and well ahead of the national rate. Tech companies have flocked to the Silicon Desert of late, a case in point being Galvanize, the Denver-based technology learning community, which opened a refurbished 58,000-square-foot warehouse, transforming it into a startup hub and learning center for the industry. Intel is working on its $7 billion Fab 42 project, which at full capacity is expected to host as many as 3,000 engineers.
Investors have set their eyes on Phoenix: The transaction volume exceeded $1.4 billion in multifamily properties in the first four months of the year, pushing the per-unit price up to $144,603. Nearly two-thirds of the deals traded RBN assets, reflecting investor interest in Phoenix’s ample value-add opportunities. Apartment construction is strong, with more than 16,600 units underway and 26,000 in the planning and permitting stages. As a result, we expect rent growth to reach 5.0 percent in 2018.