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 » Trends » Phoenix Multifamily Faced Challenging Q2
    Trends

    Phoenix Multifamily Faced Challenging Q2

    BEX StaffBy BEX StaffJuly 21, 2023No Comments3 Mins Read
    Credit: PB Bell
    Share
    Facebook Twitter LinkedIn Pinterest Email

    By PB Bell

    Momentum has shifted in the Phoenix apartment market as the area transitions from being one of the hottest multifamily metros in the country during the pandemic, to facing substantial challenges today.

    Starting in late 2021, the surge in multifamily demand that drove unprecedented performance in the prior 18 months began to evaporate as potential renter households buckled under the weight of high inflation and economic uncertainty. The slowdown in rental demand came just as new supply was ramping up, an imbalance that sent vacancy rates soaring and rent growth negative.

    Moving forward, Phoenix has yet to feel the full impact of the current pipeline, and the market is expected to see further dislocation over the near term as new supply is digested.

    Though first-quarter demand was unexpectedly strong, just 8,700 units of net absorption took place over the past 12 months, coming up well short of the 17,000 new units delivered. This supply and demand disconnect caused vacancy to climb from an all-time low of 5.1% in mid-2021 to 9.6% today, the highest level in a decade.

    Additionally, Phoenix’s annual rent growth has sharply decelerated and turned negative, at -2.6%, a far cry from the more than 20% gains seen during its peak.

    The supply waves will continue as about 35,000 units are currently underway, the majority of which are for luxury products. The focus by developers to build high-end properties is disproportionately impacting fundamentals in the 4 & 5 Star segment, especially in supply-heavy areas like Downtown Phoenix and Tempe.

    Indications from local property managers are that concessions of about six to eight weeks of free rent have become the norm at newly delivered complexes as competition at the top of the renter pool intensifies.

    Although the current landscape is quite dour compared to where the market was just a few years ago, there are some signs of optimism heading into the back half of the year. Net absorption posted its strongest quarter in the past 18 months in Q1, and CoStar‘s daily asking rent series suggests that the decline in rental rates has bottomed out.

    Additionally, the long-term drivers that supported the outstanding apartment performance during the post-COVID boom are still in place. Phoenix’s healthy job market and robust demographics will continue to strengthen underlying rental demand over the long term. The existing shortage of housing coupled with the unaffordability of the for-sale housing market will also play a role, as high prices and elevated mortgage rates force some would-be homeowners into the renter pool. To fill this niche, developers have increased the construction of single-family Build-to-Rent products, an emerging trend worth monitoring.

    Elevated interest rates and softening property performance have had a noticeable impact on sales volume. About $653M worth of Phoenix apartments traded hands in the opening three months of 2023, one of the weakest quarters in the past five years.

    Buyers are contending with materially higher debt costs and are underwriting to lower rent growth assumptions, which is making it difficult for deals to pencil. Sellers, meanwhile, have not shown a great deal of urgency to voluntarily dispose of assets if they cannot achieve outsize pricing.

    As a result, the current investment climate is in a holding pattern, which may not be resolved until greater clarity emerges on the future of monetary policy or loans on existing properties come due. Additionally, apartment values, which were climbing rapidly in 2020-21, have begun to decline and cap rates have risen 100 to 150 basis points. (Source)

    Absorption affordability apartments/condos build-to-rent cap rates capitalization rates Commercial Real Estate CoStar CRE development pipeline housing shortage monetary policy multifamily PB Bell rent rates rental prices trends vacancy
    Share. Facebook Twitter Pinterest LinkedIn WhatsApp Reddit Tumblr Email

    Related Posts

    Multifamily Developer Confidence Down in Q1

    May 13, 2025

    Affordable Housing Developments Planned in Tucson’s Mercado District

    May 9, 2025

    Mixed Residential Development Planned in Maricopa

    May 7, 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.