What's Hot

    Major General Plan Amendments Requested for 1,800-acre Florence Area

    September 5, 2025

    Mesa Approves 29-Unit Townhome Plan

    September 5, 2025

    VanTrust Announces 1.1MSF Industrial Plan in Glendale

    September 5, 2025
    Facebook Twitter Instagram
    AZBEX
    NEWS TICKER
    • [September 5, 2025] - Major General Plan Amendments Requested for 1,800-acre Florence Area
    • [September 5, 2025] - Mesa Approves 29-Unit Townhome Plan
    • [September 5, 2025] - VanTrust Announces 1.1MSF Industrial Plan in Glendale
    • [September 5, 2025] - Construction Job Openings Up 77,000 YoY
    • [September 5, 2025] - Arizona Projects 09-05-25
    • [September 3, 2025] - TSMC Building Water Reclamation Plant
    • [September 3, 2025] - Pinal Airpark Gets OK, Funding for Air Traffic Tower
    • [September 2, 2025] - 336 Apartments Coming to Casa Grande Commons
    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

      Major General Plan Amendments Requested for 1,800-acre Florence Area

      September 5, 2025

      Mesa Approves 29-Unit Townhome Plan

      September 5, 2025

      VanTrust Announces 1.1MSF Industrial Plan in Glendale

      September 5, 2025

      TSMC Building Water Reclamation Plant

      September 3, 2025

      HonorHealth to Build on Former Amkor Site in Vistancia

      September 2, 2025

      Buckeye City Council Discusses Annexing Land for Community Master Plan

      August 29, 2025

      Round 3 of BuildItAZ Grants Announced

      August 26, 2025

      Magazine Tackles Construction Crisis by Inspiring Teen Girls to Enter Skilled Trades

      August 22, 2025

      Scottsdale Hospitals War May Heat Up with New Banner Request

      July 29, 2025

      Glendale Voters to Determine VAI Resort’s Fate

      May 16, 2025

      Legislation Would Effectively Strip NIMBYs of Referendum Tool

      February 11, 2025

      2025 Forecast Tries to Clarify an Uncertain Market

      February 7, 2025

      RTA Funding Proposal Stirs Controversy

      August 15, 2025

      Ariz. LIHTC to Sunset Under New Budget

      July 8, 2025

      State Government Shutdown Averted as Hobbs Signs Budget

      July 1, 2025

      Arterial Life Cycle Program Covers 20 Years of Street Development

      June 27, 2025

      Commercial Real Estate 09-02-25

      September 2, 2025

      Commercial Real Estate 08-26-25

      August 26, 2025

      Commercial Real Estate 08-19-25

      August 19, 2025

      Commercial Real Estate 08-12-25

      August 12, 2025

      Industry Professionals 09-02-25

      September 2, 2025

      Industry Professionals 08-26-25

      August 26, 2025

      Industry Professionals 08-19-25

      August 19, 2025

      Industry Professionals 08-12-25

      August 12, 2025

      Arizona Projects 09-05-25

      September 5, 2025

      Arizona Projects 08-29-25

      August 29, 2025

      Arizona Projects 08-22-25

      August 22, 2025

      Arizona Projects 08-15-25

      August 15, 2025

      Environmentalists Sue ADWR Over Benson-Area Developments

      September 2, 2025

      Pima County Latest to Amend Zoning for Data Centers

      August 22, 2025

      Tucson City Council Likely to Approve Water Restriction on Large

      August 19, 2025

      Ritz-Carlton Paradise Valley Fight Could End in Foreclosure

      August 15, 2025

      Construction Job Openings Up 77,000 YoY

      September 5, 2025

      Ariz. Construction Lost 400 Jobs in July

      August 19, 2025

      Experts Share on the Latest Industrial Trends at BEX Panel

      August 15, 2025

      Multifamily Developer Confidence Up in Q2

      August 12, 2025

      Major General Plan Amendments Requested for 1,800-acre Florence Area

      September 5, 2025

      Mesa Approves 29-Unit Townhome Plan

      September 5, 2025

      VanTrust Announces 1.1MSF Industrial Plan in Glendale

      September 5, 2025

      Construction Job Openings Up 77,000 YoY

      September 5, 2025
    • AZBEX
      • Subscribe
      • Solicitations
      • Classifieds
      • Advertising
    • DATABEX
      • DATABEX Log-In
      • Webinars
      • Monthly Snapshot
    • Events
      • 2025 Hospitality LMS
      • 2025 Public Works Conference
    • About Us
      • Meet the Company
      • Meet the Sales Team
      • Meet the Editorial Team
      • Meet the BEXperts
    • CIP Special Report
    AZBEX
    Home » Trends » Busy Times. Where to Start?
    Trends

    Busy Times. Where to Start?

    BEX StaffBy BEX StaffNovember 19, 2019No Comments7 Mins Read
    Courtesy of ABI Multifamily
    Share
    Facebook Twitter LinkedIn Pinterest Email

    By Roland Murphy for ABI Multifamily

    As a reporter and an analyst, you are always on the lookout for things like riots, fires and mudslides because they’re riveting to report and write about.

    As someone who actually cares about the areas you cover, you want things to be slow, incremental and even placid.

    Q3 gave a fair amount of both and, unusually, did it in all the markets we cover. Following is a quick look at many of the happenings we’ve been following.

    National Rents

    In major markets across the U.S., rent growth has slowed or retreated slightly. While we tend to make a point of trying to ignore analysts who look at nine weeks of data and pretend that’s a broad enough set to predict a trend, it does merit discussion.

    While certainly not saturating, Class A vacancies have begun to inch up over the last two years in major markets like New York, LA, Washington (D.C.) and Seattle. An interesting quote in the “Emerging Trends in Real Estate® 2020” report noted, “It has largely to do with the finite limits of that more price-elastic group that can tolerate pass-along costs in their monthly rents, versus a far-larger and much faster-growing universe of people whose household incomes set lower rent tolerance levels.”

    More people are moving out of their parents’ basements and moving into their own place, but even people who can afford it are looking at other-than-top-tier properties. As we have noted here repeatedly, that’s putting more pressure on availability in Class B and even Class C properties.

    In still hot markets like Arizona in general and Phoenix in particular, that’s going to have continuing impacts on affordability and continue fueling the drive toward value-add renovations, particularly in the face of labor shortages and land costs in highly desirable submarkets, compared to completing and pressing new unit deliveries into the markets.

    What’s Up with California?

    California is exceptionally fortunate that it has an economy larger than most developed nations to absorb the scope and breadth of its policy practices, even though it’s anyone’s guess how long that will remain the case if it continues its business-hostile ways from the past three-plus decades.

    Most recently, the state has passed and scheduled a rent control process that has investors worried about what to do next. Short version: Rent growth is capped at five percent per year for properties older than 15 years. That’s likely going to gut the renovation and value-add market.

    Combined with a slew of 18 new laws intended to create tax exemptions during construction, ease permitting, simplify zoning and remove other barriers to creating new and affordable housing, rent control could, potentially, fuel new development, particularly given the rent control statute’s exemption for properties newer than 15 years.

    However, no amount of legislation is going to overcome the three harshest realities slowing development in California and around the country: 30 years of shunning trade skill training across the U.S. has created a horrifying lack of workers to execute projects; land prices are continuing to increase, and everything from concrete to rebar to drywall to nails is getting more expensive.

    On the California upside, however, a 9/27 GlobeSt discussion with David Harrington of Matthews Real Estate Investment Services noted an interesting possibility as a result of the new state regulation: California properties, even those that haven’t traditionally raised rents on a year-over-year basis, could now start implementing 5 percent bumps every year like clockwork. For properties with secure and stable debt, that’s not the worst potential ROI outcome.

    Oregon and New York also passed rent control measures this year, and many experts are concerned this could be the beginning of a national trend that could hamper the industry across the board.

    The field of Democratic Party 2020 presidential candidates is still huge, and candidates are reaching far and wide to issue proposals that will get them noticed. Toward that end, a couple of the more prominent aspirants have floated the trial balloon of federal level rent control. Details have been scant, but the idea could be appealing to younger voters starting their careers and having trouble affording the $1,189 national average for a two-bedroom.

    Industry opinions on the idea have ranged from denial and dismissal to amusement to abject terror.

    Phoenix Market Metrics: By the Numbers

    While rent growth is slowing nationwide, Phoenix has remained largely immune, and as a result the transaction appetite is still heavy.

    For 10-99-unit properties, Q3 saw a transaction volume of more than $197M, which represented a 0.7 percent Year-over-Year decrease from Q3 2018. In the 100+ unit category, Q3 brought in $1.93B, up 12.5 percent over 2018.

    Average Price-Per-Unit amounts were up in the 10-99 segment, rising 21.3 percent Y-o-Y to $119,664, and up 19.9 percent to $174,583 for 100+. These translated to an Average Price/SF of $154.04 in 10-99 (up 17.7 percent) and $205.13 (up 20.9 percent) in 100+.

    Inventory age remained relatively consistent Year-over-Year, with Average Year Built for 10-99 being 1971, versus 1970 for the same quarter last year. Average Year Built in 100+ was 1994, compared to 1991 in 2018.

    The market’s occupancy rate remained high. Q3 occupancy for 10+ units was 95.3 percent, an increase of 0.1 percent Y-o-Y. Average rent was $1,176 up 7.2 percent ($79) from Q3 2018.

    Phoenix MSA demographics continued their solid trends. The Census estimate of total population was 4,737,270. The unemployment rate finished the quarter at 3.8 percent, according to Bureau of Labor Statistics numbers.

    Median Household Income was $57,935, and Per Capita Income came in at $29,542.

    In the realm of new construction for 50+ unit properties, only 1,895 units were delivered across 10 projects, bringing the year-to-date count to 6,781 units at 30 properties, and making the odds of exceeding our start of the year projection of 8,500 deliveries appear highly unlikely.

    An estimated 22,738 units are in the Planning stages across 99 properties. A total of 14,728 units were listed as Under Construction in 57 properties.

    Pre-lease absorption rates are still high across the region at a rate of 15 units/property/month.

    Total Unit Inventory for 10+ properties was 331,307, and 50+ came in at 307,928.

    Across the MSA, 50+ unit inventories by city were:

    • Phoenix: 137,415
    • Mesa: 37,774
    • Tempe: 34,235
    • Scottsdale: 27,583
    • Glendale: 24,492

    What’s in Store for Arizona?

    Most experts at a recent conference in Los Angeles said they aren’t particularly worried about California’s five percent cap. However, if that turns out to be the beginning of the more sweeping changes some experts anticipate, and they have the effect of driving down transaction volume, it will likely turn up the heat for investment in Arizona as more investors look for new outlets.

    In addition to sitting at or near the top for demographic appeal, owners and developers looking to invest in Arizona are also benefitting from the current environment of falling interest rates. Coupled with a relative abundance of capital, the area’s investment and development boom should continue and likely accelerate even as cap rates continue to compress.

    While Arizona enjoys a favorable climate in terms of both weather and opportunity, and despite an attractively balanced mix of eager investors across the private, institutional and foreign sectors, accessing that abundance of capital continues to be a challenge for new development.

    At Bisnow’s Phoenix State of the Market event in September, several panelists lamented what they called, “An East Coast stranglehold,” on development capital. They explained an ongoing challenge in getting projects funded, particularly in office but also in multifamily, is that major lenders rely on national actuarial formulations and don’t fully take into account the currently exceptional deviations from the norm Arizona brings to the table.

    “If rent growth slows from 3 percent down to, say, 1.5 percent nationally, that’s all the money guys are going to look at,” said one panel member. “It’s frustrating when we’re seeing rent growth at 7 percent and occupancy over 95 percent. Come on, guys, we’re filling every unit we build, and we can fill a lot more if you just look at us realistically and realize we’re in a perfect environment to build and absorb more and faster than nearly anywhere else.”

    ABI Multifamily California Phoenix Q3
    Share. Facebook Twitter Pinterest LinkedIn WhatsApp Reddit Tumblr Email

    Related Posts

    Construction Job Openings Up 77,000 YoY

    September 5, 2025

    Ariz. Construction Lost 400 Jobs in July

    August 19, 2025

    Experts Share on the Latest Industrial Trends at BEX Panel

    August 15, 2025

    Leave A Reply Cancel Reply

    You must be logged in to post a comment.

    Our Picks

    Major General Plan Amendments Requested for 1,800-acre Florence Area

    September 5, 2025

    Mesa Approves 29-Unit Townhome Plan

    September 5, 2025

    VanTrust Announces 1.1MSF Industrial Plan in Glendale

    September 5, 2025

    Construction Job Openings Up 77,000 YoY

    September 5, 2025
    Stay In Touch
    • Facebook
    • Twitter
    • LinkedIn
    • YouTube
    Don't Miss
    Planning & Development

    Major General Plan Amendments Requested for 1,800-acre Florence Area

    September 5, 20250

    By Roland Murphy for AZBEX The Florence Planning and Zoning Commission will hold the first…

    Mesa Approves 29-Unit Townhome Plan

    September 5, 2025

    VanTrust Announces 1.1MSF Industrial Plan in Glendale

    September 5, 2025

    Construction Job Openings Up 77,000 YoY

    September 5, 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

    Major General Plan Amendments Requested for 1,800-acre Florence Area

    September 5, 2025

    Mesa Approves 29-Unit Townhome Plan

    September 5, 2025

    VanTrust Announces 1.1MSF Industrial Plan in Glendale

    September 5, 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.