PHOENIX—In 2015, nearly 8,000 new units have come online in Greater Phoenix. This represents an increase of over 2% to metrowide inventory. In addition, "we anticipate about 8,400 new units next year." That is according to Cliff David, VP of investments at Marcus & Millichap.
David spoke as a panelist at last week's RealShare Phoenix conference and noted that while that might sound like a big number of deliveries, it is really on average. "To this day, we still have about 40 % of our stock built in the 1980s."
From a demand standpoint, he said it will come from household formation, noting that about 20,000 new households will be formed in Greater Phoenix. Demand will also come from migration. "About 80,000 people will migrate this year, and we expect the same next year."
Employment will also be a big driver, David explains. "This year, we are tracking about 49,999 jobs, but more importantly, I think the composition of those jobs is a driver. About 39% of the jobs created in the last 12 months are higher income earning positions, which ultimately will drive apartment rents."
When asked if there is a worry of overbuilding, David said that there could be some in select areas, but generally speaking, probably not. "For the most part, we are well balanced. But we are hearing some softening and some challenges on second generation leases."
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