Source: Colliers International
Colliers International has issued its 3Q 2015 Multifamily Research & Forecast Reports for the Greater Phoenix and Tucson markets.
The Greater Phoenix multifamily market continues to forge ahead, with renter demand strong enough to drive vacancy lower even as new units come online. While additions to supply will continue for at least a few more quarters, renter demand should receive an added boost over the next 12-24 months, as employment growth is forecast to accelerate.
Highlights of the Phoenix market report include:
- Vacancy fell from 6.9 percent in the second quarter to 6.5 percent in the third quarter as renter demand remained strong. The local vacancy rate is 90 basis points lower than one year ago, and has been retreating at a pace of approximately 100 basis points per year since early 2011.
- Vacancy has tightened even as developers have delivered new units to the market. Net absorption has now been positive in each of the past 11 quarters, during which time, renters have moved into a net of nearly 12,000 units.
- Rents continue to trend higher in response to healthy demand for units and tightening vacancies. Metro wide asking rents have increased 2.9 percent in the past year to $807 per month. In low-vacancy submarkets such as South Scottsdale, North Paradise Valley and South Tempe, annual rent gains are in the 5-6 percent range.
Highlights from the Tucson market report include:
- Vacancy in the Tucson metro area ended the third quarter at 8.2 percent, improving 90 basis points from the second quarter. The rate is now 110 basis points lower than one year ago and vacancy has been below 10 percent in 12 of the past 13 quarters.
- Asking rents ended the third quarter at $636 per month, 0.2 percent higher than one year ago. The impact of newer, more expensive units being delivered to the market could influence overall rent trends, particularly at the high-end of the market. Units built in the past few years feature asking rents approaching $1,100 per month.
- Sales velocity continued to gain momentum in the third quarter, increasing approximately 10 percent from second quarter levels. With investors increasingly targeting performing secondary and tertiary markets, transaction activity in Tucson could continue to accelerate in the months ahead.