Renters in the Valley absorbed 12,860 new apartment units during last year, including more than 4,300 units in the fourth quarter.

The overall occupancy rate increased during 2000, even with the introduction of 9,456 new apartment units that came onto the market. There had been concerns that overbuilding and lessened demand would push rates lower, but instead apartment occupancy climbed 1.7% for year-end 1999 to year-end 2000, reaching 95.5%.

"Improved apartment occupancy in Phoenix is encouraging, but the market's leasing environment remains extremely competitive," says Greg Willett, editorial director at M/PF Research Inc., a real estate analysis firm. "During the past year, many property owners and managers had to sacrifice rent achievements in order to maintain healthy occupancy at existing communities and spur lease-up at new developments. Rent concessions remain the norm in many neighborhoods."

Effective asking rents for new leases in the Phoenix metro area increased an average of 3% during the past year, according to M/PF's survey. The average quoted rent was $689 per month.

Demand and rent growth was most notably sluggish in the urban core of Phoenix, where more than 2,178 new units were brought onto the market. That development was more than three times the demand for units.

"The Phoenix properties are making progress and appear likely to hold significant appeal in the future, but they did not open at the nearly full occupancy rates seen elsewhere," Willett says.

New development remains substantial, though it is down somewhat from the volume of new product delivered last year. The largest block of new supply expected to open this year will be in the Chandler/South Phoenix area.

Demand remained stronger than development during 2000.