The Phoenix Metro Rental Industry
March 27, 2017 |
President & CEO, Arizona Multihousing Association (AMA)
The rental industry in the Phoenix MSA is finally starting to catch up with major cities in America. There is market demand — plain and simple. According to a recent market report on the Phoenix multifamily industry from Colliers International, vacancy rates ticked slightly higher after a 20-year low earlier in 2016. These vacancy rates remain well below the long-term average. Experts predict some increases in rents, although likely at a slower rate. More than 18,000 units have opened in the market since early 2014, with nearly 7,000 units planned for 2017 in the Phoenix market.
Local markets, including Tucson and Phoenix rank among some of the most affordable cities in America according to reports like the Council for Community and Economic Research that measure the cost of living index and data from the U.S. Census Bureau.
Housing Mix Creates Great Neighborhoods
According to the City of Phoenix Community and Economic Development Department, the population living in multifamily homes in downtown from 1970 to 2016 has remained nearly stable, which may sound surprising as development in this area is now on an upswing. During the recent recession, few multifamily units were added to the housing mix. Only in the most recent years are we seeing new multifamily units added to the housing mix downtown. These units will begin to meet the pent-up demand for apartments in the downtown Phoenix area.
Ninety percent of the multifamily units under construction today in downtown Phoenix sit within one-quarter (1/4) mile of a bus or light rail stop. Connecting housing and transportation lines will enhance livability for those residents, allowing them to take advantage of the transportation system. For the greater community, this helps to alleviate traffic and air pollution.
Today, the City of Phoenix reports that within a five-mile radius of downtown there are:
– Approximately 6,000 affordable housing units under construction
– More than 12,000 workforce housing units under construction
– Approximately 9,000 Class B units coming into the market
– Currently, 5,000 Class A units are under construction
A more urbanized downtown Phoenix where amenities are rich such as cultural destinations, shopping and dining, can be accessed by walking or light rail. This will enhance the livability of the community and build on its vibrancy. The addition of ASU’s downtown campus served as a catalyst for this early redevelopment of the downtown area. Students living and attending classes created momentum and demand for diverse dining and entertainment options close to campus.
In addition, many of the most popular neighborhoods in Phoenix have seen a renaissance in the past few years. Amenities have grown to the north and south along Central and 7th Street and 7th Avenue, where today there is a resurgence of redevelopment projects that meet the needs of both families in single-family homes and those in apartments.
Change Is Here to Stay
Following the recession, many American cities have seen a cultural shift where many residents prefer to rent, particularly in more urbanized areas, to take advantage of the lifestyle and convenience. Some of this relates to millennials who are waiting to marry or move out of their family’s home until later in life. There has also been an increase in boomers looking to downsize and move into more urban areas where they can enjoy more amenities nearby.
Many new apartment communities are also outside of downtown Phoenix. Suburban communities like Tempe, Scottsdale and Chandler debuted new, urban multifamily residences in their downtowns that are attracting a healthy mix of younger renters. These renters also enjoy a walkable neighborhood near shopping and dining. Unique amenities and resort style living attract those who want it all, with minimal maintenance in a highly desirable location.
At the same time, investments to upgrade aging apartment communities are taking place throughout Phoenix MSA. These investments will only add to the resident experience while enhancing the surrounding neighborhoods.
The Valley’s ability to attract new employers and grow existing companies paired with overall population growth continues to support the expansion of the multifamily market. We will continue to see more rental demand today and in the years ahead.
Tom is the President and CEO of the Arizona Multihousing Association. He is also an attorney and licensed realtor. He can be contacted by email at firstname.lastname@example.org.
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