Phoenix: Maintaining Momentum in the Desert
The metro is outpacing the country in job creation and population growth, drawing multifamily developers and investors looking for opportunities in second-tier markets.
By Anca Gagiuc
Outpacing the country in job creation and population growth, Phoenix is appealing to multifamily developers and investors looking for opportunities in second-tier markets. Although rent growth decelerated in the first half of 2017, rents rose by 3.4 percent year-over-year through July, which is still well above the 2.6 percent national average.
Employment growth is diversified, with leisure and hospitality, education and health services, and professional and business services occupying top positions in the number of jobs added. Companies such as Facebook, Boeing and Intel are planning expansions in the metro, while JP Morgan Chase is developing a 67-acre campus in Tempe, where it aims to locate more than 4,000 jobs.
The metro’s investment activity remains strong, with nearly $2.4 billion in multifamily properties trading in 2017 through July. As the city competes with California, Texas and the Mountain States to attract talent, jobs and companies, housing demand has exceeded supply in recent years. As a result, development is robust, with 17,000 units under construction, some 5,600 of which are slated for completion by year-end. Although the occupancy rate was just 94.9 percent as of July, down 60 basis points in 12 months, we expect demand to remain strong, with the average rent rising by 5.3 percent in 2017.