Over the past several months, multifamily in the US has outpaced historic growth. Here’s the top 3 things we’ve seen in the Phoenix market that supports the optimistic outlook on multifamily.
Industry experts have noted the large influx of people making their way to Phoenix. According to an article from AZ Big Media, “Phoenix is the third-fastest-growing large U.S. metro with a below-average cost of living”.
Many people are making the move as they re-evaluate their jobs and locations. With companies increasingly allowing employees to work from home, individuals are changing their perspective on what they want to be doing and where they want to live. This new phenomenon has been deemed “The Great Resignation,” and Phoenix has undoubtedly seen its impact.
In addition to the increasing population growth in Phoenix, the Valley is also experiencing a construction boom. AZ Big Media shared that “Phoenix has the most multifamily product under construction that will be completed within the coming year, with nearly 20,100 units set to complete in the next 12 months”. This is big news for both residents and owners in the multifamily market. The massive amount of new construction has put Phoenix on the map as a hot spot for multifamily.
Arizona isn’t the only state experiencing a construction boom; Texas has seen similar if not more impressive numbers. In Dallas-Fort Worth specifically, there has been nearly 154,000 new apartments delivered in the past 10 years with another 28,600 units under way in the years to come.
Finally, we’ve taken note of the increase in rental activity. Rental applications have risen 39% in Arizona, primarily due to new Generation Z renters entering the market. These young renters have outpaced the national trend.
This boost in rental demand has certainly impacted our properties at Sterling. At Pennytree, we’ve consistently seen rent renewals 15%+ over existing leases. Vacancy has hardly been an issue as our units are being preleased almost immediately after hitting the market. Lea Ann Scofield, Sterling’s SVP of Operations added, “This market is on fire! Every day we get 10-20 inquiries for people looking to tour or lease and some willing to lease an apartment sight unseen. Most units do not stay on the market longer than 1-2 weeks and are almost always rented before they are ready.”
Between population growth, the construction boom, and rental activity, we’re excited about the future of multifamily in Phoenix.