Mashup Finds Similarities Between Colleges

The comparison area encompasses the two largest colleges in Arizona.

PHOENIX—The ABI Mashup is a comparative analysis series detailing the similarities and differences between separate metros, cities and submarkets compiled by ABI Multifamily . In the latest Mashup, the comparison area encompasses the two largest colleges in Arizona: Arizona State University (ASU) and University of Arizona (U of A) and the respective submarkets in which each is located. For ease of comparison, the analysis focuses only on the main campuses for each university and surrounding submarkets: ASU is located in the North Tempe/University Submarket (hereafter referred to as NTU) in Tempe and U of A is located in the Central Tucson/University Submarket (hereafter referred to as CTU) of Tucson. In regards to total properties (50-plus units in size), both submarkets are remarkably similar. NTU, oddly enough, has less total apartment communities at 77, then CTU with 87. Nonetheless, in total submarket unit count, NTU bests CTU with 14,443 total units to 11,374 units respectively. NTU’s average year built for all properties trends newer at 1986 and denser with average units per property at 188 when compared with CTU with a 1983 average year build and 131 average units per property. In regards to new construction, NTU had a total inventory increase of 33% or 3,569 units since 2010 while CTU increased 15% or 1,480 total units. NTU had significant activity from California-based investors from 2010 to 2015, who purchased 2,632 units totaling 15 transactions. Arizona-based investors came in second with 1,037 units purchased totaling nine transactions. Rounding out the top three were Texas-based investors who purchased 1,503 units in six transactions. NTU has reported more properties transacting for $956 million in aggregate sales volume, as compared with CTU’s $341 million in aggregate sales volume. Both NTU and CTU recorded virtually the same percentage increase in average rental rates at 42% and 41% respectively. Although percentage-wise they are the same, NTU’s current $1,268 average monthly rent is $322 per month higher than CTU’s $946 per month average. In terms of affordability, CTU’s housing cost-to-income ratio which calculates housing affordability (no more than 30% of a person or household’s income should be used on rent) is lower at 42% than NTU’s 49%; however both are above the 30% affordability measure. NTU’s affordability ratio has spiked the greatest, rising 20% since 2010, whereas CTU’s rose 7%. Despite dramatic increases in overall average rents, occupancy rates continue to increase for both submarkets. Current occupancy for NTU rests at 94.6% while CTU is 94.8%. Thomas Brophy , director of research for ABI Multifamily tells GlobeSt.com: “I was surprised by the similarities of both submarkets when compared to each other, especially in regards to general land area (surprisingly Central Tucson is denser at 4,463 people per square mile than North Tempe at 4,260) and both occupancy and rent increases, on a percentage basis. Although the North Tempe Submarket has seen significantly more economic development/improvement with over 7,000 new job announcements and over $1 billion in both private and public development (light rail, Town Lake, Papago Center, etc.), Central Tucson Submarket has recently witnessed its own major economic catalysts from Comcast’s 1,100-plus job announcement to Caterpillar’s regional headquarters relocation to downtown. It will be interesting to watch how both submarkets mature and continue to grow moving forward.”