Riding the Tech Wave in Phoenix
Multifamily development is not slowing down across the metro, as population growth and a thriving job market continue to fuel apartment demand.
By Alexandra Pacurar
Phoenix rent evolution, click to enlarge
Phoenix is reinventing itself as a tech hub driven by a diverse economy, welcoming young professionals and investors looking for higher yields in secondary markets. The total transaction volume in 2017 was nearly $4.5 billion, almost on par with the 2016 cycle peak.
Education and health services led employment gains with 10,100 jobs added in the 12 months ending in October 2017. The technology sector is quickly catching up. Statistics from the Arizona Office of Economic Opportunity Employment show that the professional/scientific/technical services subcategory jumped 4.8 percent for the same period. Phoenix ranked third among the country’s hottest cities for tech jobs in 2017, according to Money magazine, with several companies relocating or expanding in the metro. Intel announced a $7 billion expansion slated to bring 3,000 new jobs to Phoenix. The metro’s industrial market is also performing well: Last year, Phoenix achieved its largest-ever annual net absorption gain, reaching 9.8 million square feet.
Development is not slowing down, as population growth and a thriving job market are fueling demand. Roughly 7,500 units are expected to come online in 2018, a projected 15 percent increase over 2017, when new units were quickly absorbed. Rent growth remains above the national average, despite deceleration in the last few months of 2017. Yardi Matrix forecasts a 5.0 percent rent growth for 2018. Â
