Phoenix Multifamily Report – January 2023
Supply is finally catching up with demand in this Arizona city.
Phoenix had a tepid year in 2022, affected by national and global events and will likely remain sensitive to upcoming shifts in the economy. The multifamily market is cooling down after a remarkable run, responding to record supply additions and tempering in-migration, which diluted demand. Consequently, rents declined 0.4 percent on a trailing three-month basis through November, faster than the 0.1 percent U.S. rate, and occupancy lost 160 basis points in the 12 months ending in October, decreasing to 94.3 percent.
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Phoenix unemployment stood at 3.5 percent in October, outperforming the state (3.9 percent) and the nation (3.7 percent), according to preliminary data from the Bureau of Labor Statistics. The job market expanded just 3.9 percent in the 12 months ending in September, lagging the U.S. rate by 30 basis points. During the period, just the financial services sector lost jobs (1,400 jobs). Phoenix’s largest sectors led employment growth—education and health services, professional and business services, and trade, transportation and utilities—with 55,600 positions combined. Company expansions in the metro include Sendoso, Nestle and XNRGY.
Deliveries marked a new record high, with 11,258 units completed through November. Another 38,406 units were underway, but the number of construction starts dwindled. Meanwhile, investment volume totaled $10.5 billion, with the price per unit rising 31.6 percent year-over-year, to $325,644.