Phoenix, AZ | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Phoenix, AZ

Phoenix: 2015 Multifamily Markets to WatchThe glut of foreclosed single-family homes now available for rent in the suburban submarkets of Phoenix has not weighed significantly on the downtown apartment scene. Reflecting the depth of the local market’s economic downturn and the challenging path to recovery, however, asking rent growth in Phoenix had been relatively slower than in gateway and other primary markets. The dynamic changed over the last year and a half as vacancy rates fell below 5% and rent growth kicked into high gear, rising nearly 7% in 2014 and at an annualized rate of 7.2% in the first quarter of 2015. The outlook for Phoenix over the next year remains bright, given a limited pipeline of new apartments and healthy job growth.

As cap rates for the best-performing assets have fallen to cyclical lows, developers in the area have more readily snapped up value-add opportunities in urban in-fill locations. Given their relatively high cap rates, property makeovers may offer a compelling buy for investors, provided they have strong operational capabilities.

To read more on Phoenix and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report here.


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