Phoenix shows continued upswing on apartment rents; Tucson vacancy dips below 6 percent
PHOENIX, ARIZONA (NOV. 12, 2018) — NorthMarq Multifamily has published its first market research report for Tucson and Phoenix, offering in-depth research and on-the-ground expertise about multifamily market conditions and trends. The company continues to grow from its initial office in Phoenix by adding brokers in Albuquerque, Dallas, Kansas City, and Southern California and will provide market coverage of those markets in the coming months.
“We view this market insight to be critical for our clients as they review current listings and consider their long-term investment strategy,” said Trevor Koskovich, president – NorthMarq Multifamily.
“The reports released today highlight the overall strength for multifamily properties in both Phoenix and Tucson. Both markets are adding jobs at above-average rates, which is translating directly into renter demand for apartments. This demand has allowed vacancy rates to remain low even as new units have come online, particularly in Phoenix. Our analysis of the current conditions, and our forecasts for the near term call for continued health in both the Phoenix and Tucson multifamily markets,” said Pete O’Neil, director of research, who joined NorthMarq this fall to provide research and market analytics.
Key findings for Phoenix
- Conditions in the Phoenix multifamily market strengthened in the third quarter, with vacancy dipping and asking rents on a steep rise. Investors continued to respond to the favorable fundamentals, fueling an uptick in the sales of apartment properties.
- Multifamily vacancy in the Phoenix market fell 10 basis points in the third quarter, dipping to 5.7 percent. The rate is identical to one year ago and has remained in a very tight range since 2016.
- Rents continue to advance at a strong clip. Asking rents rose 1.8 percent in the third quarter, and are up 8 percent from one year ago. Asking rents ended the third quarter at $1,056 per month.
- With renter demand elevated, apartment deliveries have been on the rise. More than 2,500 units were delivered during the third quarter, and completions have topped 6,300 units thus far in 2018.
- The investment market posted mixed performance during the third quarter, with sales activity gaining momentum, but the median price inching lower. Cap rates have remained very consistent throughout 2018, averaging approximately 5.3 percent.
Key Findings for Tucson
- The Tucson apartment market improved during the third quarter with vacancy dipping and rents posting strong gains. The market is being supported by an accelerating pace of employment growth.
- Vacancy dipped by 30 basis points in the third quarter, ending the period at 6 percent. The current vacancy rate is 50 basis points lower than one year ago.
- Asking rents posted another quarterly increase in excess of 2 percent. During the past 12 months, asking rents have spiked by 6.8 percent, reaching $767 per month.
- Investment conditions cooled a bit during the third quarter with sales velocity slowing and the median price inching lower. Year to date, the median price is $50,000 per unit, while the average cap rate is just under 6 percent.