By Roland Murphy for Arizona Builder’s Exchange
Investment in downtown infrastructure and facilities has continued to fuel significant growth in multifamily residential, according to the recently released Downtown Phoenix: 2015-2016 Multifamily Property Development Report, from ABI Multifamily in downtown infrastructure and facilities has fueled significant recovery in multifamily, particularly in terms of
Vacancy rates and average rents have shown significant gains, primarily due to ongoing investment and infrastructure growth.
Downtown multifamily rentals saw a peak vacancy rate of around 19 percent in 2009. They then entered a marked recovery to just over 4.5 percent in 2012. Despite modest rises and falls as more units have come online and been absorbed, downtown rates have trended largely in the 7-9 percent vacancy range.
During the crash and beginning of the recovery, average rents saw little change, hovering between $950 and $1000 from 2008-2010. Since then rates have seen a relatively steady increase, to a current average rent of $1,357 across all rental types, up more than 46 percent since 2010.
Townhouse and apartment-style single-family residential sales were particularly hard hit in the recession and have still not reclaimed their former levels. By the time the market bottomed out in 2011, the average sale price had dropped 65 percent, to a low of $137,512.
The market the rebounded significantly until becoming fairly steady in 2013. The current average sale price is $236,403.
In 2014, it was estimated nearly 17,000 people lived in the immediate downtown area, increasing to nearly 93,000 living within three miles.
Downtown currently claims just fewer than 94,000 primary jobs in the area. In 2005 that number was more than 112,000; however most of the current job growth and recovery are listed in the upper income rage of $3,333 or more per month.
The greatest single area of job additions has come in finance and insurance, with an increase of 4.2 percent.
The downtown area currently lists nearly 5,800 total rental units in 32 multifamily properties. 15 of those properties (approximately 1,500 units) have age and/or affordability restrictions in place. Nine properties (1,073 units) are currently under construction, with 15-16 more properties planned.
Fuel for Recovery and Growth
Economic investment, development and revitalization have been buzzwords in the downtown area for decades, but the beginning of Valley’s light rail development in 2005 marks one key point when rhetoric began turning into reality.
Extensive development of new campuses and facilities by Arizona State University and The University of Arizona, investment in a growing technology corridor, biomedical sciences and cultural and lifestyle developments have all contributed significantly to recovery and growth in the downtown multifamily market.