Compared to other large metros, Phoenix seems to have been better-equipped to withstand the blows dealt by the health crisis—at least for now. Following two months of contractions, the metro’s average rent was up 0.1 percent on a trailing three-month basis through July, and 20 basis points above the U.S. rate. The $1,209 rate remained well behind the $1,460 U.S. figure. Occupancy in stabilized assets declined just 30 basis points year-over-year, to 95.0 percent as of June.
The unemployment rate slid to 8.4 percent in May from 12.5 percent in April, but the spike in virus cases will likely affect the economy; preliminary June data pointed to an additional increase to 9.7 percent. Leisure and hospitality contracted by 26.8 percent, while the metro’s main economic drivers—trade, transportation and utilities and professional and business services—contracted by 0.6 percent and 6.7 percent, respectively.
Since the outbreak of COVID-19 and through the end of July, roughly 840,000 unemployment claims were filed across the state. Development maintained the robust pace of recent years with nearly 22,000 units underway as of July, while deliveries amounted to 3,746 apartments this year through July. Meanwhile, transactions slowed down, totaling just $1.7 billion, with the per-unit price improving slightly. We expect the average Phoenix rent to rise 0.4 percent in 2020.