July 21, 2021

Phoenix Q2 Multifamily Market Report: Rents Spike in Response to Accelerating Demand Growth

Highlights:

A surge in demand and a lack of available supply resulted in a record-setting period of rent growth in the Phoenix multifamily
market in the second quarter. Demand was fueled by a surging local labor market and in-migration from neighboring areas. Apartment construction is picking up, which should help bring supply and demand more closely in balance.
Vacancy reached an all-time low during the second quarter, falling 40 basis points to 4.1 percent. Year over year, vacancy has tightened by 160 basis points.
Rents spiked in the second quarter, reaching $1,401 per month. Rents were pushed higher by an accelerating pace of renter demand and extremely low vacancies.'
Net absorption during the second quarter totaled almost 5,000 units, nearly doubling the figure from the first quarter. Through the first half of 2021, net absorption has exceeded 7,600 units.
After rising to start the year, sales of local apartment properties surged in the second quarter, spiking by approximately 50 percent. The median price year to date has risen to $197,500 per unit, while cap rates have compressed to 4.3 percent.