Phoenix is one of the top 10 markets for class-B rent growth, according to a new report from CBRE. The ranking illustrates the intense growth in the market, and has fueled substantial value-add investment activity. The rent growth in this specific segment of the multifamily market illustrates Phoenix's value proposition is affordability, which has fueled population and job growth in the market in recent years.

“Phoenix is really a top growth market,” Brian Smuckler, SVP at CBRE, tells GlobeSt.com. “We are a top five market for rent growth as well as occupancy rates and affordability. Right now, about 20% of income goes towards rents for multifamily, and we are seeing really strong employment growth. We are seeing a lot of net in migration because of jobs. Those are the most important areas for really strong multifamily fundamentals, and that is why a lot of investors are looking at Phoenix.”

As a result of the strong rent growth in class-B and class-C housing, value-add investors are seeing tremendous opportunities. According to the report, there has been $375 billion in workforce housing investment activity in the last five years. That number represents more than half—51.3%—of total multifamily investment. “Phoenix has really strong capital demand, and I think that it is because of the value proposition here. We have a growing population and labor pool,” explains Smuckler. “We have a much more diversified employment base that we did a decade ago. When you factor in the affordability, the quality of life and the fact that Phoenix is a really business friendly environment, it really bodes well for multifamily fundamentals. The capital then follows that.”