Strong supply continues to pressure Phoenix’s multifamily market, restraining rent growth and having an impact on occupancy, writes Yardi Matrix in its recent Phoenix Multifamily Market report.
Rents have fallen 3.1% over the past year, to $1,550, posting the third-lowest performance among Yardi Matrix’s top 30 metros.
Employment is slowing down, the continuing available supply is slowing down rent movement and developers are scaling down big projects, the report says.
Pipeline is cooling off
Following a two-year wall of deliveries, the pipeline is steadily cooling off.
Still, figures remain fairly robust, with 3,763 units completed this year through April and an additional 34,937 units underway.
Rents contract
The high influx of new high-end Lifestyle units contributed to steady contractions across asset classes. Declines were, of course, steeper in the Lifestyle segment, where advertised asking rents slid 0.4%, on a T3 basis through April, to $1,740.
Year-over-year through April, the average advertised asking rent increased in just one submarket: Scottsdale–North (1.0% to $2,003), which is the metro’s the second-most expensive area.
The priciest submarket, Phoenix–Paradise Valley Village, saw its average drop 0.4%, to $2,025. In downtown Phoenix, which had the largest pipeline as of April, rents inched down just 0.1%, to $1,970.
Employment
While Phoenix saw some softening in employment, a lot is still happening in and around in the Phoenix metro.
“This includes the start of operations for the first phase of TSMC’s (Taiwan Semiconductor) Fab 21 chip fabrication facility. The second phase is in equipping mode, while the third fab broke ground in April. The entire project is expected to employ 6,000 workers.”
Meanwhile, Intel made slight cuts to its workforce in the area. However, the $32 billion expansion of the Ocotillo campus in Chandler is still slated for a 2025 delivery and projected to generate 3,000 manufacturing jobs.
Read the full report here.
About Yardi Matrix
Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.
