Phoenix Multifamily Report – Summer 2019
The metro’s strong demand for multifamily housing, fueled by rapid demographic and economic growth, is projected to keep up with the development pipeline.
Phoenix rent evolution, click to enlarge
The Phoenix multifamily market kicked off 2019 with strong rent growth, completions and transaction activity. At 6.8 percent as of May, nearly three times the U.S. average, year-over-year rent growth led all major metros in the country. The development boom continues, with 4,053 units coming online in the first five months of 2019. Even so, occupancy in stabilized properties actually inched up 20 basis points over 12 months, to 95.5 percent as of April.
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Employment growth was robust in the metro, which gained 58,500 jobs in the 12 months ending in March, a 3.1 percent increase, nearly double the national rate. Improvement was widespread, with all sectors recording net gains. Construction led the way with the addition of 14,000 positions, buoyed by the sustained expansion of real estate development. Education and health services followed closely, adding 13,900 jobs during the same period, bolstered by both Arizona State University and the booming bioscience field. Professional and business services is also growing (11,600 jobs), as the metro is competing with Texas in corporate relocations and expansions.
Phoenix sales volume and number of properties sold, click to enlarge
Some $2.5 billion in multifamily assets traded in the metro this year through May. Boosted by rapid population growth and a burgeoning economy, housing demand is poised for a strong 2019, while new supply struggles to keep up. We expect the average Phoenix rent to rise 5.3 percent this year.
