Phoenix Multifamily Report – September 2022

After a phenomental 2021, the rental market is leveling off.

Phoenix rent evolution, click to enlarge

Phoenix’s economy has been in expansion mode since late last year, when it recovered all jobs lost during the pandemic. Its prospects are mostly dependent on national and global events. Expectedly, the multifamily market reacted to the positive economic performance with robust fundamentals, especially on the supply and investment scenes, delivering all-time high figures. Consequences of the recent substantial supply volume reverberated in rent growth—moderating since the start of the year and up just 0.3 percent on a T3 basis through July, to $1,690—and pushed occupancy down 110 basis points in the 12 months ending in June, to 95.3 percent.

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Phoenix sales volume and number of properties sold, click to enlarge

Phoenix unemployment stood at 3.4 percent in June, according to preliminary data from the Bureau of Labor Statistics, leading the U.S. (3.6 percent) and trailing the state (3.3 percent). The job market added 81,000 positions, up 4.0 percent in the 12 months ending in May, with gains led by the leisure and hospitality segment (23,300 jobs). The financial activities and government sectors lost 2,800 jobs combined, but overall, the metro had 15,000 more office-using positions than it did pre-pandemic.

Developers delivered 7,701 units in 2022 through July and had another 34,700 units under construction. Meanwhile, investment activity exceeded $7.5 billion, above the volume recorded during the same period last year, with the price per unit surpassing the $300,000 mark following a 48 percent annual increase.

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