Phoenix Multifamily Will Remain Unchanged Through the Year End
Expect more of the same from the Phoenix multifamily market in the second half of the year.
The Phoenix multifamily market had a phenomenal start to the year with nearly $2 billion in apartment investment activity and strong rent growth, all of which is driven by the continued growth in the job markets and population, according to a report from ABI Multifamily. For the second half of the year, expect similar performance from the Phoenix multifamily market.
:I expect investment activity to be kind of like first half, but more so. Phoenix isn’t looking at anything noteworthy in terms of new deliveries,” Roland Murphy, director of research at ABI Multifamily, tells GlobeSt.com.” Fed rate policies should keep capital freely available. Fear of that inevitable but still far off downturn will cause some owners to sell while the market is still hot, but consistently rising prices will motivate others to hold on as long as they can.”
In the second half of the year, Murphy expects value-add deals to be the most popular investment asset, which is similar to what the market has experienced so far this year. “Buyers will continue to target any kind of value proposition, whether it’s snapping up a well-performing property now before the price nudges up or securing properties that aren’t living up to their full potential and investing in value-add programs before the market starts to peak,” he says.
While Phoenix is among the top rent growth and investment markets in the country, some investors are opting for markets like Las Vegas over Phoenix; however, Murphy says that there are still plenty of opportunities in the market. “Multifamily remains strong across the board, but particularly in Phoenix. Going into the general consensus for 2019 among pundits was, he says. “Expect it to be like 2018, but more so.” Milquetoast and safe as that sounded, it’s turned out to be largely correct.”
By every metric, the Phoenix apartment market is performing phenomenally well. “We saw a healthy year-over-year spike of more than 25% in quarterly transaction volume, but the 3% growth in average price/unit and the 0.6% increase in price/SF shows a very reasonable and well-managed set of conditions with solid adherence to market fundamentals,” he says.