What's Hot

    Labor Department Issues New Guidance on Independent Contractor Classification

    May 14, 2025

    City Will Spend $522M Preparing Peoria Innovation

    May 14, 2025

    ADOT to Hold Hearing on Tentative 5-Year Construction Plan

    May 14, 2025
    Facebook Twitter Instagram
    AZBEX
    NEWS TICKER
    • [May 14, 2025] - Labor Department Issues New Guidance on Independent Contractor Classification
    • [May 14, 2025] - City Will Spend $522M Preparing Peoria Innovation
    • [May 14, 2025] - ADOT to Hold Hearing on Tentative 5-Year Construction Plan
    • [May 13, 2025] - Industrial Rezoning Sought for 369 Acres in Douglas
    • [May 13, 2025] - Pinal BOS Okays Rezone for Spec Industrial Park
    • [May 13, 2025] - Multifamily Developer Confidence Down in Q1
    • [May 13, 2025] - Industry Professionals 05-13-25
    • [May 13, 2025] - Commercial Real Estate 05-13-25
    Facebook Twitter YouTube LinkedIn
    • Home
    • News
      1. View Latest
      2. Planning & Development
      3. Local News
      4. Classifieds
      5. Editorial Analysis
      6. Budgets & Funding
      7. Commercial Real Estate
      8. People on the Move
      9. Arizona Projects
      10. Legislation & Regulations
      11. Trends

      City Will Spend $522M Preparing Peoria Innovation

      May 14, 2025

      Industrial Rezoning Sought for 369 Acres in Douglas

      May 13, 2025

      Pinal BOS Okays Rezone for Spec Industrial Park

      May 13, 2025

      Affordable Housing Developments Planned in Tucson’s Mercado District

      May 9, 2025

      ADOT to Hold Hearing on Tentative 5-Year Construction Plan

      May 14, 2025

      ASPE Panel Discusses Tariffs, Uncertainty and Optimism

      May 2, 2025

      Small & Disadvantaged Business Transportation EXPO is May 20

      May 2, 2025

      Arizona Water Professionals Remain Hopeful Despite Colorado River Struggles

      April 29, 2025

      Legislation Would Effectively Strip NIMBYs of Referendum Tool

      February 11, 2025

      2025 Forecast Tries to Clarify an Uncertain Market

      February 7, 2025

      KOREPlex Buckeye Site Quietly Listed For Sale

      January 31, 2025

      Axon Says it will Open Search for New Location

      January 10, 2025

      Scottsdale Water Needs $50M for ‘Toilet to Taps’

      May 9, 2025

      Phoenix Releases $11.5B, 5-Year CIP with Nearly 1,000 Projects

      April 1, 2025

      Buckeye Starts Planning Bond Funding Outlays

      February 26, 2025

      $400M of Federal Funding in Limbo for Phoenix Plans

      February 14, 2025

      Commercial Real Estate 05-13-25

      May 13, 2025

      Commercial Real Estate 05-06-25

      May 6, 2025

      Commercial Real Estate 04-29-25

      April 29, 2025

      Commercial Real Estate 04-22-25

      April 22, 2025

      Industry Professionals 05-13-25

      May 13, 2025

      Industry Professionals 05-06-25

      May 6, 2025

      Industry Professionals 04-29-25

      April 29, 2025

      Industry Professionals 04-22-25

      April 22, 2025

      Arizona Projects 05-09-25

      May 9, 2025

      Arizona Projects 05-02-25

      May 2, 2025

      Arizona Projects 04-25-25

      April 26, 2025

      Arizona Projects 04-18-25

      April 18, 2025

      Executive Order Will Streamline Federal Acquisition Regulations System

      April 26, 2025

      Legislation to Save Axon Plan Continues to Advance

      April 16, 2025

      Court Issues Summary Judgment in X Phoenix Case

      April 16, 2025

      House Bill Would Expand LIHTC Credits

      April 15, 2025

      Multifamily Developer Confidence Down in Q1

      May 13, 2025

      U.S. Construction Added 11,000 Jobs in April

      May 6, 2025

      Jobsite Safety Can Improve 7x with Best Practices

      May 6, 2025

      March Construction Job Openings Down by 38,000

      May 2, 2025

      Labor Department Issues New Guidance on Independent Contractor Classification

      May 14, 2025

      City Will Spend $522M Preparing Peoria Innovation

      May 14, 2025

      ADOT to Hold Hearing on Tentative 5-Year Construction Plan

      May 14, 2025

      Industrial Rezoning Sought for 369 Acres in Douglas

      May 13, 2025
    • AZBEX
      • Subscribe
      • Classifieds
      • Advertising
    • DATABEX
      • Webinars
      • Monthly Snapshot
    • Events
      • Housing Projects on the Horizon
    • About Us
      • Meet the Company
      • Meet the Sales Team
      • Meet the Editorial Team
      • Meet the BEXperts
    AZBEX
    Home » Local News » PHX Multifamily Still Appealing
    Local News

    PHX Multifamily Still Appealing

    BEX StaffBy BEX StaffAugust 10, 2018No Comments5 Mins Read
    Courtesy of ABI Multifamily
    Share
    Facebook Twitter LinkedIn Pinterest Email

    By Roland Murphy for Arizona Builder’s Exchange

    Institutional investors are actively seeking multifamily opportunities in the Phoenix area, and that trend shows no sign of slowing down in the near term, according to the “ABInsight Phoenix MSA 2Q 2018” market report published this week by ABI Multifamily.

    In the report, ABI Director of Research Thomas M. Brophy extensively catalogs a host of economic data to support his view on the strength of the area’s multifamily market. Gross Domestic Product was recently reported at 4.1 percent. Inflation is just slightly more than 2 percent. National unemployment is 4 percent (4.7 in Arizona, unchanged May-July), and – despite recent increases by the Federal Reserve – interest rates are still at near historic lows. These broad economic trends, Brophy theorizes, combined with the pace of absorption and delivery of new units to market, keep multifamily opportunities in the greater Phoenix area highly appealing.

    Market Metrics

    Brophy notes the total sales volume for properties with more than 10 units, “increased 13 percent, Y-o-Y, to $1.52B across 94 transactions representing 10,182 total units sold.”

    Non-local investors remain the major players. California-based investors remain in the lead with 4,101 units purchased in Q2, or 40 percent of the total volume. They are followed by Canadians, with 1,109 units, and New Yorkers, with 1,074. Arizona investors were fourth at 1,044 units purchased. Rounding out the top five were Pacific Northwest-based investors with 704 units.

    Year-over-Year, sales in the more than 100-unit segment increased 13 percent to $1.34B. The 10-99-unit space also increased, rising 19 percent Y-o-Y.

    Builders delivered 2,380 units in Q2, a 47 percent increase over last year. For 2018 in total, they are on track for more than 9,000, the most since the 9,315 high of 2009.

    Developers have increased purchases of attractive land for new projects and have planned unit construction numbers of 16,761, 36 percent more than a year ago and a Quarter-over-Quarter increase of 21 percent.

    Occupancy rates and asking rents also increased. The end of Q2 saw occupancy at 95.3 percent, a 0.2 percent Y-o-Y increase. Average rent went up 6.4 percent over the year to $1,067. Increases around the area were:

    • Glendale: 6.6 percent;
    • Phoenix: 6.1 percent;
    • Tempe: 5.8 percent;
    • Mesa: 5.6 percent, and
    • Scottsdale: 5.3 percent.

    Average actual rent remains highest in Scottsdale at $1,363.

    What’s Driving Institutional Investors, and Who are They?

    Brophy quotes Oliver Senchal’s forward to the recent “Preqin Quarterly Update: Real Estate Q2 2018,” in which Senchal notes investors maintain concerns about a possible economic downturn and have shown an increased appetite for the downside risk protection of debt funds. “Indicators appear to be moving from opportunity funds down the spectrum towards value added and coreplus vehicles,” Senchal claims.

    Brophy immediately follows this with, “As I’ve stated many times, large institutional investors are all back in the Phoenix MSA and actively looking to acquire more properties.”

    The primary drivers of interest in metro Phoenix over other markets is the area’s robust jobs growth – 3.1 percent Y-o-Y – and ongoing population growth. He quotes Chamber Business News as reporting, “Valley advanced business services, financial services and technology companies increased workforce by 15,000 jobs over June 2017. The average individual wage, according to the U.S. Bureau of Labor Statistics May 2018 data, topped $60K in these sectors.”

    Brophy also notes that even with the 2,380-unit delivery number, occupancy rates increase by 20 basis points to 95.3 percent, which, he says, “was surprising even to me and suggests that population growth is higher than most are predicting.”

    Among institutional investment groups betting heavily on the Phoenix MSA, New York-based The Blackstone Group is the major player. When AZBEX received its advance copy of ABI Multifamily’s Q2 report on Monday, Aug. 6, Blackstone’s purchases in 2018 totaled 2,211 units across five properties.

    Since then, however, news broke the firm purchased the six-property portfolio of DRA Advisors/The Milestone Group, a total of 1,721 units, for $311M.

    In addition to its multifamily purchases, The Blackstone Group has also invested heavily in the mobile home community market and has acquired 3,181 units in 17 properties, Brophy said.

    Other large firms making purchases in greater Phoenix over the last year include Goldman Sachs, TruAmerica Multifamily, Eaton Vance, Weidner, Western Wealth Capital, FPA Multifamily and BH Equities.

    What Lies Ahead?

    After analyzing traditional recession risks and indicators, and the potential overall market impacts of a downturn, Brophy points out the appeal of multifamily investment if other options become less attractive.

    He says, “Suppose real estate return rates revert to average historical levels of 3.8 percent, across the board, and average rental rates soften to 2 percent-plus, contingent upon market. Where else are you going to find a better return? Investors are slowly beginning to wake up to this new market reality, and my best guess, without the benefit of a future indicating magical crystal ball, is that multifamily is where they will want to be.”

    The full report is available for download here.

    BH Equities construction pipeline Eaton Vance FPA Multifamily Goldman Sachs institutional investment market report multifamily multifamily investment Phoenix Phoenix MSA The Blackstone Group TruAmerica Multifamily Weidner Western Wealth Capital
    Share. Facebook Twitter Pinterest LinkedIn WhatsApp Reddit Tumblr Email

    Related Posts

    ADOT to Hold Hearing on Tentative 5-Year Construction Plan

    May 14, 2025

    Multifamily Developer Confidence Down in Q1

    May 13, 2025

    Affordable Housing Developments Planned in Tucson’s Mercado District

    May 9, 2025

    Leave A Reply Cancel Reply

    You must be logged in to post a comment.

    Our Picks

    Labor Department Issues New Guidance on Independent Contractor Classification

    May 14, 2025

    City Will Spend $522M Preparing Peoria Innovation

    May 14, 2025

    ADOT to Hold Hearing on Tentative 5-Year Construction Plan

    May 14, 2025

    Industrial Rezoning Sought for 369 Acres in Douglas

    May 13, 2025
    Stay In Touch
    • Facebook
    • Twitter
    • LinkedIn
    • YouTube
    Don't Miss
    Federal

    Labor Department Issues New Guidance on Independent Contractor Classification

    May 14, 20250

    By National Association of Home Builders The Department of Labor’s Wage and Hour Division recently…

    City Will Spend $522M Preparing Peoria Innovation

    May 14, 2025

    ADOT to Hold Hearing on Tentative 5-Year Construction Plan

    May 14, 2025

    Industrial Rezoning Sought for 369 Acres in Douglas

    May 13, 2025

    BEX serves architecture, engineering and construction firms as well as all the ancillary product and service categories that market to them. These include manufacturing representatives, public agencies and private real estate organizations, specialty subcontractors and services providers related to our industry.

    Our Picks

    Labor Department Issues New Guidance on Independent Contractor Classification

    May 14, 2025

    City Will Spend $522M Preparing Peoria Innovation

    May 14, 2025

    ADOT to Hold Hearing on Tentative 5-Year Construction Plan

    May 14, 2025
    Contact Us

    Phone: 480-709-4190
    Address: P.O. Box 12196 Tempe, AZ 85284
    Email: sales@azbex.com

    Type above and press Enter to search. Press Esc to cancel.