After lagging behind the rest of the country in post-recession jobs recovery, the Valley of the Sun has seen considerable gains over the last few quarters, with local employment rising 1.3 percent in the third quarter of 2012 alone. 42,600 positions have been added to the metro since the beginning of the year and, in tandem with national trends, more people have begun looking for work—causing the unemployment rate to tick up slightly to 7.3 percent.
One of the greatest contributors to the job gains has been the state-approved Renewable Energy Tax Incentive Program of 2010, which is already translating into hundreds of positions. First Solar is currently constructing a new manufacturing center in Mesa that will bring 600 jobs to the region, and San Diego-based Maxwell Industries is set to open a manufacturing facility in Peoria that will generate around 200 jobs.
Thus, as the jobs picture begins to brighten, vacancies have fallen below their pre-recession 2006 levels. According to Hendricks & Partners, overall vacancy dipped 10 basis points over the last quarter to 6.4 percent, this after falling 80 basis points during the first half of the year. Additionally, the last two quarters netted more than 1,000 move-ins.
As absorption of existing inventory ramps up, construction has begun to lose pace from previous years—allaying concerns of oversaturation of supply. Just over 500 have been delivered so far in 2012, this compared to 640 in 2011 and nearly 3,000 in 2010. However, a new wave of supply may be coming in the next couple of years, as developers have requested permits for 2,860 annualized units. At least 5,300 units are expected to be added between the Q4 2012 and the end of 2014.
Overall rents increased by 1.2 percent to $777 per month between March and September, with the South Scottsdale submarket seeing the greatest increase of 3.5 percent. Meanwhile, the North Scottsdale area posted the highest average rent—at $1,021 per month. According to Hendricks & Partners, Class A asking rents have increased nearly 2 percent to $1,046 per month over the last year.
Forbes recently ranked Phoenix ninth among its list of the “Top 10 Potential Boom Cities,” citing its prospective industry diversity and marked job growth. Sustained economic growth of 2.3 percent is expected to continue throughout the year, and some speculate on into 2013.
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