The number of bids coming in on apartment complexes in the Valley is down by approximately 30%, Sean Cunningham, a multifamily specialist and senior vice president in the Phoenix office of CB Richard Ellis tells GlobeSt.com. "The institutional investor is absent in Phoenix right now," he says.

REITs haven't been active in the Valley for more than two years. With the recent loss of institutional investors, all that's left to bid on class-A and B projects are private investors, he says. A number of apartment owners have recognized the market is flat and have ceased to market their properties until they see signs of a turn-around, he says. "There is less inventory to purchase than in prior years," he says.

Investors are seeing modest-to-flat rent growth in many of the Valley's submarkets, he says. New construction and lower interest rates for new home ownership have decreased demand, he says. Investors are taking their dollars to cities with a higher barrier to new construction, like Chicago and Southern California.

"They see a decline in permit activity for new starts, but they don't think it will have an impact on Phoenix for another 18 months," he says. Cunningham expects about 8,600 units will be brought to the market this year, similar to the numbers posted during 2000.While absorption just about matched last year's development pace, it's not keeping up with this year's, he says. "Supply is exceeding demand and therefore moderating rent growth," he assesses.

In some submarkets, such as the West Valley, apartment owners are offering concessions not seen in years, as much as six weeks of free rent on a year lease. "That's when you know it's getting soupy," Cunningham says. "It's a little bit softer than what it desired.