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Report: Q3 Rents, Construction Rising

Courtesy of ABI Multifamily

By Roland Murphy for Arizona Builder’s Exchange

Even though deliveries at multifamily properties of more than 10 units had a 10 percent year-over-year decrease in metro Phoenix, indicators of the market’s health are strong overall, according to the ABI Multifamily Q3 Report.

Third quarter deliveries were 1,157, down from last year’s number of 1,280. Ten-plus unit sales volume totaled $1.2B, with the average price-per-unit hitting $100,963, both 12 percent increases over the same period last year. Average occupancy remains high at 96 percent, and rents continue to climb, up 7.7 percent to an average $970.

The report lists a total inventory of 347,260 units, with 11,577 units under construction in developments of more than 50 units.

Demographically, the area population continues to grow, totaling just fewer than 4.5M. Employment also grew, up 2.3 percent, for an August unemployment rate of 5.0 percent.

Average rents remain highest in Scottsdale ($1,248) and Tempe ($1,168); however these two cities saw the lowest increases. Even though rents in Phoenix ($886), Mesa ($858) and Glendale ($822) are markedly lower than the two leaders, their growth rates are racing to catch up. Year-over-year changes showed Phoenix up 8 percent, Mesa up 9.9 percent, and Glendale up 10.5 percent.

Sales of large developments of more than 100 units dropped 34.7 percent in Phoenix, but saw impressive increases in Tempe (20 percent), Mesa (39.3 percent), and particularly in Scottsdale, with a jump there of 257.2 percent. Taken all together, the metro area saw an 8 percent increase in sales volume to $1.07B.

In the more than 100 unit sector, the top three transactions were the Crescent Scottsdale Quarter at $87M, Chandler’s Almeria at Ocotillo at nearly $82M, and the Proxy 333 in Phoenix at $21.8M.

Sales of developments in the 10-99-unit range showed increases in all three cities with activity in that space. Phoenix was up 24.6 percent, Tempe, 110 percent, and Mesa 206.1 percent.

Leading transactions in that space were the Monterosa Villas in Phoenix at $4.38M, Fountain Villas in Scottsdale at just over $3M, and the Shalimar Apartments in Phoenix at an even $3M.

 

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