With rent growth rebounding to nearly double the national rate, Phoenix is experiencing a sudden sprint in rent improvement, as positive demographic trends and one of the most active economies in the U.S. prop up the metro’s multifamily market. Rents were up 5.4 percent year-over-year through September, to an average of $1,085. Despite high completion rates, average occupancy in stabilized properties actually rose to 95.2 percent in August, up 40 basis points year-over-year.
Employment growth continued at an elevated rate, with 61,300 jobs added in the 12 months ending in July. Improvement was widespread, with all but one sector recording net job gains. Construction added 12,900 positions, as the sector continued to benefit from an expanding multifamily pipeline, with 15,700 units underway as of September. The metro’s office pipeline also remains strong, as more than 4.2 million square feet of space was underway as of October.
Strengthening market fundamentals have proved appealing to investors, leading total sales to $4.4 billion through the year’s first nine months. Going forward, Phoenix is likely to continue having strong delivery rates, as 6,800 units had already been added as of September, and another 3,000 were expected to come online by year’s end. All in all, rents are likely to continue their rise.