Continued Growth in Greater Phoenix
June 3, 2019
Principal/ Designated Broker, Tru Realty
Greater Phoenix has come a long way from its humble roots as a farm town, established in 1881. If you’re not from the area, it may be hard to believe that Phoenix ranks #5 on the list of largest cities in the U.S.
The state of Arizona has one of the fastest growing economies in the nation, with Phoenix at the forefront. According to the most recent U.S. Bureau of Economic Analysis State Data available, Arizona is amongst the top 5 in fastest growth, with an increase of 4.3% in gross domestic product. As the most populous city in Arizona, greater Phoenix remains a large part of this growth, with no signs of slowing down.
The job market in greater Phoenix also continues to grow. With the recent statistics, it’s no surprise that Arizona as a whole is expected to outpace the nation in job growth, with the majority of those opportunities existing in the state capital. Excluding Phoenix, Maricopa County could see up to 2.1% in employment increases annually, with greater Phoenix alone seeing a 1.5% increase. What may come as a surprise to some, is that the job market has increased in certain unexpected areas. Prior to the recession, most job opportunities came from real estate, retail sales, and construction. But now, financial and business services, as well as healthcare and manufacturing, are meeting, if not outpacing, the industries previously mentioned. Furthermore, Phoenix, dubbed by some as “Wall Street West,” is ranked #3 on the list of cities with the highest number of workers in the financial services industry.
The statistics around job growth are supported further by the increase in demand for office real estate, which outpaced supply in 2018, according to the 2019 Phoenix Market Outlook Report conducted by CBRE Research. This report also stated that net absorption had outpaced new supply since 2011, further pushing down office space vacancy from its recessionary peak of 26.2% to 15.2% in Q4 2018.
Office space hasn’t been the only part of the Phoenix real estate market in high demand, according to CBRE Research. The demand for multifamily housing has outpaced new supply for eight straight years (with the exception of 2016), pushing down the vacancy rate from a recessionary peak of 11.6% to a low of 4.5% in 2018. Nearly 8,300 new units, mainly employment centers and amenity-rich submarkets, were added to the market, which is up from 6,300 new units in the year prior. Also, many mid- and high-rise projects were constructed in downtown Phoenix, as well as Tempe and Midtown.
Naturally, the increase in property demand means an increase in median home value. Per Zillow, the median home value in Phoenix is $235,200, up 8.4% over the past year. Zillow predicts this number to rise 4.3% within the next year.
With a growing economy and a beautifully sunny state comes a vibrant community. Greater Phoenix continues to offer endless opportunities for residents and visitors to take part in nearly every hobby imaginable. Whether you enjoy museum-hopping, golf, baseball, the arts, hiking, or watching professional sports, Phoenix likely has what you’re looking for.
Phoenicians are proud of the community they’ve built and are generally friendly and welcoming to those who join. With the thriving job market and strong economy, it seems as if the community of greater Phoenix will continue to grow and expand.