PHOENIX—There are renters that would like to buy homes, but can't because of the barriers there. There is also a new group of renters by choice. Those thoughts are from Melanie Morrison, principal of MEB Management Services, who recently spoke about multifamily demand at RealShare Phoenix Metro.
Morrison explains that there is a much higher percentage of renter who is an empty nester in Phoenix. "After the recession, people's mindset changed a bit about mortgages. They don't want to be tied down by a mortgage."
She added that "We have empty nesters, retirees, young professionals who need the ability to move if their job changes and young professionals. I also think we still have some pent up demand from Millennials living at home."
As of now, moderator John Kobierowski, senior managing partner of ABI Multifamily, said that 100% of the multifamily development he sees is spec development. "And we are filling it," he said. "We are leasing up so quickly that construction can't keep up with it."
Brandon Harrington, SVP of Walker & Dunlop, explains that 40% of the units in the Phoenix Metro area are 1980s built. "The amount of units we are bringing today is relatively conservative. We are looking closely at the absorption schedule."
When Walker & Dunlop does a loan, Harrington said that they have to make sure it will absorb. "What we have looked at in Phoenix compared to other markets is that the absorption and demand have been very strong."
He adds that Phoenix is definitely a value. "There is relative value for Millennials moving to phoenix. We have seen a total transition from people wanting to buy a house in the southeast valley to people wanting to be in core locations. That is what is really pushing a lot of this development. You can buy a class c apartment complex for $130,000 in Denver or you can buy a class A product in Phoenix in the high $100,000s depending on where you are at, so there is relative value in this market place."
Check out the following articles for more from the RealShare Phoenix Metro event.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
