January 28, 2021

Phoenix Q4 Multifamily Market Report: Property Sales Accelerate and Prices Spike to Close 2020

Highlights:

The Phoenix multifamily market posted strong performance in 2020, particularly in the second half of the year when absorption spiked, vacancy tightened, and rents rose. Healthy levels of absorption are forecast to persist into 2021, and developers will continue to bring thousands of new units to the market to meet this demand.
Vacancy reached an all-time low during the fourth quarter, tightening to 4.6 percent. The rate fell 100 basis points in 2020, with all of the improvement recorded during the second half of the year.
With vacancy improving, asking rents rose 2.1 percent in the fourth quarter, reaching $1,238 per month. For the full year, rents rose 5.4 percent.
Developers continue to move new projects into the construction pipeline. Nearly 11,000 rental units were delivered in 2020, and more than 20,000 units are currently under construction.
Sales of multifamily properties gained momentum during the fourth quarter. With activity picking up, prices rose. The median price spiked 24 percent in 2020, reaching $170,900 per unit. Cap rates were steady for most of the year, averaging 4.9 percent.