Phoenix Multifamily Report – September 2023
A solid pipeline has cooled off the city's dry heat, at least temporarily.
Phoenix rents stabilized on a trailing three-month basis through July, after 10 months of negative values, still under the pressure of consistent completions. The average rate was down year-over-year, at -3.5 percent as of July, marking the second-slowest rate of growth among major U.S. metros. Meanwhile, national growth decelerated to 1.6 percent, reaching $1,729. Phoenix occupancy slid 60 basis points in the 12 months ending in June, to 93.9 percent.
Unemployment stood at 3.9 percent in June, slightly higher than both the Arizona (3.5 percent) and U.S. (3.6 percent) averages. Employment grew by 2.4 percent, or 37,500 jobs. Education and health services (19,700 jobs) led the way, while trade, transportation and utilities continued to shed positions, down by 3,300 jobs. Information, financial activities and other services also experienced losses. Meanwhile, construction expanded, as Phoenix held the country’s largest industrial pipeline as of June (58.8 million square feet).
Developers delivered 5,892 units this year through July and had an additional 37,606 units underway. Yardi Matrix expects 18,571 units to come online across Phoenix during 2023, for a decade high and the country’s second-largest expected delivery volume after Austin (24,145 units). Meanwhile, investment activity slowed, with $1.3 billion trading year-to-date through July, for a price per unit that was 34 percent higher than the national average.