July 23, 2020

Phoenix Q2 Multifamily Report: New Supply Coming Online, Even as Demand Growth Cools

Highlights:

All markets are being impacted by the COVID-19 outbreak, but to this point, the Phoenix multifamily market has performed quite well. Vacancy is only slightly higher than one year ago, and that is due largely to seasonal factors and an increase in new supply.
Vacancy rose 30 basis points during the second quarter, reaching 5.7 percent. Increases in the summer months are common; the rate has risen during the second quarter in each of the past 10 years.
Rents dipped slightly in the second quarter as the market softened and uncertainty surrounding the economy rose. Asking rents ended the second quarter at $1,184 per month, up 4 percent year over year.
Multifamily development is active in 2020. Developers completed more than 7,200 apartment units during the first half of the year, with another 15,100 units currently under construction.
Investment activity slowed but has not stopped completely, and prices and cap rates are demonstrating continued strength. The median price is up 20 percent year to date, reaching $166,000 per unit, while cap rates are averaging 5 percent.