Why Is Everyone So Afraid of New Construction in Multifamily?

Multi-Family and Apartment Investing
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Why Is Everyone So Afraid of New Construction in Multifamily?

Ben Leybovich
Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes

There is a lot of fear of new construction in the multifamily sector. I am not sure I understand why. I think we can use it to our advantage.

@Sam Grooms and I buy apartments in Phoenix. Statistically, considering the demographics, it is thought that Phoenix will need 150,000 new apartment homes by 2030. Currently, there are about 15,000 in the pipeline. The construction costs are up tremendously. Construction volume is also capped by a shortage of skilled labor, as much as anything else. Even if we wanted to build 50,000 units in the next 2 years, we can’t.

So, how do we use this to our advantage?

We just closed on another community. This is a 94-unit community a block away from downtown Mesa. This location is designated a QOZ, and as such a ton of new construction has already broken ground, and a lot more is planned. The community sits right on top of the light rail, with the station right at the corner. Sun Crest backs up to the amazing Pioneer park that the city just spent $8M renovating.

The downtown Mesa is in midst of a fantastic revitalization, and we believe within a few years it will become a hub! Especially considering the ASU expansion that is coming in.

Talk about the Path of progress!

This was a smaller acquisition for us, but we couldn't pass up the growth prospects. We paid $10.6M and we will complete a $3M renovation scope, which will include the construction of a new office and gym, expansions of the pool and a bark park, as well as the typical for us interior scope which includes cabinets, granite, appliances, and W/D install.

Here’s the kicker:

New construction in Phoenix rents for an average $1,500 per month. In this location, looking at the filed permits, I think many of the rents will be North of $2 sq.ft with an average per unit of at least $1,700 - $1,800.

Our re-positioned average pricing is $1,200. These units are large, so this pricing equates to $1.30 per sq.ft.

So - what we have is a community that will offer 85% of what new construction offers in terms of location, finishing surfaces, and amenities, but at 65% of the cost, or less. It will become the budget-friendly option for anyone wanting to be in what will become a trendy location in the East Valley in one of the hottest growth markets in the country. It will offer tenants much of what Class A will, but at a large discount.

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Serge S.
Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
6y

The concern is rather obvious. When people pay over the cost of new construction for C class assets under the premise that post renovation rents will be more affordable than competing new construction; there is some serious inherent risk. If you talk to large experienced long term players in Arizona multifamily like Ken McElroy, he will tell you that it makes no sense to buy C class when you can build for the same or less all in. Hence all of the new construction.

Rents will not grow indefinitely and when it gets competitive the new construction assets with the same basis as the C class rehab junk will have room to maneuver while the over rehabbed, maxed out rent C class goes back to the bank. It doesn't seem possible that can happen again but it will. There is a real affordability crisis and a renter that qualifies for $1300 rent must gross $45k/year. If your business plan is banking on average rents of $1300 in a demographic where median income is half that do you see how that can be a problem?

The people who say its a great idea to buy a rehab at 3% cap in a gentrifying opportunity zone area are the 2019 version of the SFR investor of 2006. Take a hard look at SFR rents in said gentrifying opportunity zone and ask yourself if people will pay the same rent for rehabbed one bedroom apt as a 3-4 bedroom house around the corner. Ask yourself if your end buyer will pay the average regional SFR median price for 1-2 bd apartments in one of the lowest county median income regions. Be careful who you listen to on BiggerPockets. You will not hear @Brian Burke boasting about his latest 3 cap deal.

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  • Connor Stark
    Real Estate Agent · Los Angeles · Member since 2019 · 57 posts · 40 votes
    6y

    Nice take on the market. I've done some research and it doesn't seem like the supply will reach demand in the Phoenix area in the near future. Plus given a correction in the market, you're protected because you're community is not highest priced luxury in the area. If the economy is doing well then people will be upgrading into your units. If people are looking to conserve money, you'll have potential tenants looking to move in to shield their personal finances a little. 

    0Reply
  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    6y

    @Ben Leybovich real estate is hyper local so not all markets are seeing the same things. New construction dramatically impacts some markets but will have no affect on others as is probably true in your case. 

    Sounds like you have a somewhat unique situation in terms of location and demand metrics in regards to the new acquisition. Congratulations!

    1Reply
  • Ben Leybovich
    OP
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Connor Stark:

    Nice take on the market. I've done some research and it doesn't seem like the supply will reach demand in the Phoenix area in the near future. Plus given a correction in the market, you're protected because you're community is not highest priced luxury in the area. If the economy is doing well then people will be upgrading into your units. If people are looking to conserve money, you'll have potential tenants looking to move in to shield their personal finances a little. 

    I concur with your assessment!

    0Reply
  • Matthew Perry
    Investor · Prescott/Tempe, AZ · Member since 2013 · 73 posts · 57 votes
    6y

    @Ben Leybovich I did grad school in downtown Mesa at Benedictine University and I saw that area began to gentrify with the expansion of the university, new construction and new microbrewery. I think you invested in a growing sub market.

    1Reply
  • Tj Hines
    Specialist · Tampa, FL · Member since 2012 · 933 posts · 492 votes
    6y

    Hey there @Ben Leybovich! Congrats on the new acquisition. Sounds like you guys have all of the market fundamentals down to a "T". Sweet! Not sure if Mesa is a primary market or a secondary. I'm thinking secondary.

    We're in the Florida markets. We're seeing quite a bit of what you're seeing and I'm seeing. Most of what could be happening in primary markets that are over saturated spills over into secondary markets because of affordability. I think it's a good thing. You guys will do well. Congrats again.

    The question is what happens to new construction once the market heads the other way?

    1Reply
  • Ben Leybovich
    OP
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Greg Dickerson:

    @Ben Leybovich real estate is hyper local so not all markets are seeing the same things. New construction dramatically impacts some markets but will have no affect on others as is probably true in your case. 

    Sounds like you have a somewhat unique situation in terms of location and demand metrics in regards to the new acquisition. Congratulations!

    Greg, I think we need to acknowledge that while some markets are driving the growth, other markets are just along for the ride. I think we agree that what we do can only be done in growth markets. 

    0Reply
  • Account Closed
    Investor · Phoenix, AZ · Member since 2018 · 420 posts · 388 votes
    6y

    @Ben Leybovich

    Given that metro Phoenix is gigantic it’s hard to say that new construction is averaging $1,500 particularly without knowing the unit mix and specific location. In Mesa and many parts of Phoenix you can go from $1M single family homes to $150k condos without blinking.

    I think the fear right now is based on construction costs which mandate that you compete for that Class A market share. IMHO it’s impossible to predict the truest path of growth in the metro area. West Phoenix has seen much of the development as of late simply due to the lower cost of land. Jerry Colangelo’s development, the south mountain loop 202, Cavasson, Desert Ridge, Gilbert’s explosion, the downtown revitalization...it’s literally a crap shoot to see which area truly comes out on top. They are all competing for the same market share after all.

    I think there is an income problem in Phoenix (and many other areas) right now where the construction/permitting shortage you mentioned has caused prices/rents to outrun what is affordable/comfortable. If you’re investing in class C I imagine that’s a great place to be right now in terms of occupancy rates, but I’m curious what kind of appreciation you’re modeling against all this competing development?

    1Reply
  • Ben Leybovich
    OP
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Matthew Perry:

    @Ben Leybovich I did grad school in downtown Mesa at Benedictine University and I saw that area began to gentrify with the expansion of the university, new construction and new microbrewery. I think you invested in a growing sub market.

    Matt, you can already see a lot of development. This is definitely a high growth sub-market. The city is positioning it as such.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Ben how does any of this thread relate to new construction ?   lol

    I am working on a project in Oregon right now 400 lots and 180 unit MF.. our goal will be to spin the MF prop to someone who is an expert at it..  the money is in the SFR new construction.
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  • Ben Leybovich
    OP
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Account Closed:

    @Ben Leybovich

    Given that metro Phoenix is gigantic it’s hard to say that new construction is averaging $1,500 particularly without knowing the unit mix and specific location. In Mesa and many parts of Phoenix you can go from $1M single family homes to $150k condos without blinking.

    I think the fear right now is based on construction costs which mandate that you compete for that Class A market share. IMHO it’s impossible to predict the truest path of growth in the metro area. West Phoenix has seen much of the development as of late simply due to the lower cost of land. Jerry Colangelo’s development, the south mountain loop 202, Cavasson, Desert Ridge, Gilbert’s explosion, the downtown revitalization...it’s literally a crap shoot to see which area truly comes out on top. They are all competing for the same market share after all.

    I think there is an income problem in Phoenix (and many other areas) right now where the construction/permitting shortage you mentioned has caused prices/rents to outrun what is affordable/comfortable. If you’re investing in class C I imagine that’s a great place to be right now in terms of occupancy rates, but I’m curious what kind of appreciation you’re modeling against all this competing development?

    Whitney, I am basically in agreement with everything you say as it applies to single-family residential. I am not a fan of SRF in Phoenix for investment purposes at all. Don't own any. Rents are much too low and the only cash flow is AirBnB and VRBO.

    In apartments, the situation is quite different. The average rent, last time I checked, is $1,107 - $1,170 (depends on where you look), which is about $350 under the national average. New construction average rent is $1,500, which is driven by the cost of building which continues to climb.

    New construction represents about 7% of the apartment stock, and considering the constraints and time-frame to build, the absorption is unlikely to change any time soon. And there is a real shortage of quality product in the range of $800 - $1200.

    I think the economics in the apartment space are not the same as single-family. I am bullish. That said, we don't model any market appreciation per se at all. These are value-add acquisitions. Once we capture the LTL and get the reno bump, from there it's just 3% increase in rents and 2% increase in OpEx, and whatever that does to the value.

    0Reply
  • Ben Leybovich
    OP
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Jay Hinrichs:
    Ben how does any of this thread relate to new construction ?   lol

    I am working on a project in Oregon right now 400 lots and 180 unit MF.. our goal will be to spin the MF prop to someone who is an expert at it..  the money is in the SFR new construction.

    Jay, when I speak of construction I am referring to multifamily construction. Lots of folks define the baseline in terms of construction costs/replacement costs. This, I think, is flawed in many ways, some of which I try to illuminate in my post.

    Has nothing to do with SFR residential construction, at least not directly.

    0Reply
  • Michael Ealy
    Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
    6y
    Originally posted by @Ben Leybovich:

    There is a lot of fear of new construction in the multifamily sector. I am not sure I understand why. I think we can use it to our advantage.

    @Sam Grooms and I buy apartments in Phoenix. Statistically, considering the demographics, it is thought that Phoenix will need 150,000 new apartment homes by 2030. Currently, there are about 15,000 in the pipeline. The construction costs are up tremendously. Construction volume is also capped by a shortage of skilled labor, as much as anything else. Even if we wanted to build 50,000 units in the next 2 years, we can’t.

    So, how do we use this to our advantage?

    We just closed on another community. This is a 94-unit community a block away from downtown Mesa. This location is designated a QOZ, and as such a ton of new construction has already broken ground, and a lot more is planned. The community sits right on top of the light rail, with the station right at the corner. Sun Crest backs up to the amazing Pioneer park that the city just spent $8M renovating.

    The downtown Mesa is in midst of a fantastic revitalization, and we believe within a few years it will become a hub! Especially considering the ASU expansion that is coming in.

    Talk about the Path of progress!

    This was a smaller acquisition for us, but we couldn't pass up the growth prospects. We paid $10.6M and we will complete a $3M renovation scope, which will include the construction of a new office and gym, expansions of the pool and a bark park, as well as the typical for us interior scope which includes cabinets, granite, appliances, and W/D install.

    Here’s the kicker:

    New construction in Phoenix rents for an average $1,500 per month. In this location, looking at the filed permits, I think many of the rents will be North of $2 sq.ft with an average per unit of at least $1,700 - $1,800.

    Our re-positioned average pricing is $1,200. These units are large, so this pricing equates to $1.30 per sq.ft.

    So - what we have is a community that will offer 85% of what new construction offers in terms of location, finishing surfaces, and amenities, but at 65% of the cost, or less. It will become the budget-friendly option for anyone wanting to be in what will become a trendy location in the East Valley in one of the hottest growth markets in the country. It will offer tenants much of what Class A will, but at a large discount.

     Congrats Ben.

    Your assessment is right on the money. That's our approach as well not just in our apartment acquisition but also with hotels.

    We look at new construction costs and the rents they get and compare it renovating an existing building and the rents we can get. If there's parity or not much difference, we can build new. If, the latter is better like in your case, then we buy existing buildings.

    In Cincinnati, in the B and C submarkets, there is not much new construction coming in the pipeline but demand has risen up and continues to go up with about 20,000 new jobs coming in. Hence, rents are increasing,& values continue to climb.

    1Reply
  • Ben Leybovich
    OP
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Michael Ealy:
    Originally posted by @Ben Leybovich:

    There is a lot of fear of new construction in the multifamily sector. I am not sure I understand why. I think we can use it to our advantage.

    @Sam Grooms and I buy apartments in Phoenix. Statistically, considering the demographics, it is thought that Phoenix will need 150,000 new apartment homes by 2030. Currently, there are about 15,000 in the pipeline. The construction costs are up tremendously. Construction volume is also capped by a shortage of skilled labor, as much as anything else. Even if we wanted to build 50,000 units in the next 2 years, we can’t.

    So, how do we use this to our advantage?

    We just closed on another community. This is a 94-unit community a block away from downtown Mesa. This location is designated a QOZ, and as such a ton of new construction has already broken ground, and a lot more is planned. The community sits right on top of the light rail, with the station right at the corner. Sun Crest backs up to the amazing Pioneer park that the city just spent $8M renovating.

    The downtown Mesa is in midst of a fantastic revitalization, and we believe within a few years it will become a hub! Especially considering the ASU expansion that is coming in.

    Talk about the Path of progress!

    This was a smaller acquisition for us, but we couldn't pass up the growth prospects. We paid $10.6M and we will complete a $3M renovation scope, which will include the construction of a new office and gym, expansions of the pool and a bark park, as well as the typical for us interior scope which includes cabinets, granite, appliances, and W/D install.

    Here’s the kicker:

    New construction in Phoenix rents for an average $1,500 per month. In this location, looking at the filed permits, I think many of the rents will be North of $2 sq.ft with an average per unit of at least $1,700 - $1,800.

    Our re-positioned average pricing is $1,200. These units are large, so this pricing equates to $1.30 per sq.ft.

    So - what we have is a community that will offer 85% of what new construction offers in terms of location, finishing surfaces, and amenities, but at 65% of the cost, or less. It will become the budget-friendly option for anyone wanting to be in what will become a trendy location in the East Valley in one of the hottest growth markets in the country. It will offer tenants much of what Class A will, but at a large discount.

     Congrats Ben.

    Your assessment is right on the money. That's our approach as well not just in our apartment acquisition but also with hotels.

    We look at new construction costs and the rents they get and compare it renovating an existing building and the rents we can get. If there's parity or not much difference, we can build new. If, the latter is better like in your case, then we buy existing buildings.

    In Cincinnati, in the B and C submarkets, there is not much new construction coming in the pipeline but demand has risen up and continues to go up with about 20,000 new jobs coming in. Hence, rents are increasing,& values continue to climb.

     Michael, you bring up an interesting point. There's not much new construction (if any) coming to the C+/B- sub-markets. In those locations, the very viable questions is - will new construction ever come there? Or at least come en-mass? If jobs are coming, and the momentum is in the right direction, but the sub-market is either cost-prohibitive or land-locked, then what you and I do can be seen from yet another focal point altogether...

    0Reply
  • William Coet
    Lititz, PA · Member since 2013 · 595 posts · 272 votes
    6y
    Originally posted by @Ben Leybovich:
    Originally posted by @Michael Ealy:
    Originally posted by @Ben Leybovich:

    There is a lot of fear of new construction in the multifamily sector. I am not sure I understand why. I think we can use it to our advantage.

    @Sam Grooms and I buy apartments in Phoenix. Statistically, considering the demographics, it is thought that Phoenix will need 150,000 new apartment homes by 2030. Currently, there are about 15,000 in the pipeline. The construction costs are up tremendously. Construction volume is also capped by a shortage of skilled labor, as much as anything else. Even if we wanted to build 50,000 units in the next 2 years, we can’t.

    So, how do we use this to our advantage?

    We just closed on another community. This is a 94-unit community a block away from downtown Mesa. This location is designated a QOZ, and as such a ton of new construction has already broken ground, and a lot more is planned. The community sits right on top of the light rail, with the station right at the corner. Sun Crest backs up to the amazing Pioneer park that the city just spent $8M renovating.

    The downtown Mesa is in midst of a fantastic revitalization, and we believe within a few years it will become a hub! Especially considering the ASU expansion that is coming in.

    Talk about the Path of progress!

    This was a smaller acquisition for us, but we couldn't pass up the growth prospects. We paid $10.6M and we will complete a $3M renovation scope, which will include the construction of a new office and gym, expansions of the pool and a bark park, as well as the typical for us interior scope which includes cabinets, granite, appliances, and W/D install.

    Here’s the kicker:

    New construction in Phoenix rents for an average $1,500 per month. In this location, looking at the filed permits, I think many of the rents will be North of $2 sq.ft with an average per unit of at least $1,700 - $1,800.

    Our re-positioned average pricing is $1,200. These units are large, so this pricing equates to $1.30 per sq.ft.

    So - what we have is a community that will offer 85% of what new construction offers in terms of location, finishing surfaces, and amenities, but at 65% of the cost, or less. It will become the budget-friendly option for anyone wanting to be in what will become a trendy location in the East Valley in one of the hottest growth markets in the country. It will offer tenants much of what Class A will, but at a large discount.

     Congrats Ben.

    Your assessment is right on the money. That's our approach as well not just in our apartment acquisition but also with hotels.

    We look at new construction costs and the rents they get and compare it renovating an existing building and the rents we can get. If there's parity or not much difference, we can build new. If, the latter is better like in your case, then we buy existing buildings.

    In Cincinnati, in the B and C submarkets, there is not much new construction coming in the pipeline but demand has risen up and continues to go up with about 20,000 new jobs coming in. Hence, rents are increasing,& values continue to climb.

     Michael, you bring up an interesting point. There's not much new construction (if any) coming to the C+/B- sub-markets. In those locations, the very viable questions is - will new construction ever come there? Or at least come en-mass? If jobs are coming, and the momentum is in the right direction, but the sub-market is either cost-prohibitive or land-locked, then what you and I do can be seen from yet another focal point altogether...

    Ben, Congrats on your new acquisition.  I have a question about this your reference to sub-markets in your last post.  Specifically why would a sub-market be cost prohibitive?  Is it primarily because of lower rents in C and B sub-markets?  Is it because of land acquisition costs?  

    0Reply
  • Ben Leybovich
    OP
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    6y

    @William Coet There are cycles in which you can simply buy property. And, there are cycles in which you have to buy the story. In my opinion, we are in one of the latter cycles.

    The story starts with growth, because growth creates demand and you need demand in order to do what we do. Additionally, you want to be in a constrained supply environment, and it doesn't matter much why the supply is constrained so long as it is.

    I could go down the list. But, the point is, most sub-markets don't fit this thinking very well.

    1Reply
  • William Coet
    Lititz, PA · Member since 2013 · 595 posts · 272 votes
    6y

    @Ben Leybovich I wasn't able to edit my last post in time, but I was specifically referring to what can make  a sub-market be cost prohibitive for new construction of multifamly? Is it primarily because of lower rents in C and B sub-markets? Is it because of land acquisition costs?

    Thanks

    0Reply
  • Ben Leybovich
    OP
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @William Coet:

    @Ben Leybovich I wasn't able to edit my last post in time, but I was specifically referring to what can make  a sub-market be cost prohibitive for new construction of multifamly? Is it primarily because of lower rents in C and B sub-markets? Is it because of land acquisition costs?

    Thanks

    Cost prohibitive to construction - rent rates too low to make construction viable.

    2Reply
  • Tyler Weaver
    Investor · Cincinnati, OH · Member since 2008 · 319 posts · 243 votes
    6y

    You are asking why everyone is afraid of new construction as competition or why everyone is afraid to do new construction?  New construction is likely the biggest risk factor in multifamily where a softening of the economy mixed with new units hitting the market can temporarily create a race to the bottom on pricing.  In highly leveraged deals this could destroy the liquidity of the deal. 

    The labor pool is probably more dynamic than you estimate.  *IF* you decided to build 50,000 units in short order it would be accompanied with a story of why the market is undervalued and you would have to be willing to pay a premium to get those units built.  

    0Reply
  • Serge S.
    Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
    6y

    The concern is rather obvious. When people pay over the cost of new construction for C class assets under the premise that post renovation rents will be more affordable than competing new construction; there is some serious inherent risk. If you talk to large experienced long term players in Arizona multifamily like Ken McElroy, he will tell you that it makes no sense to buy C class when you can build for the same or less all in. Hence all of the new construction.

    Rents will not grow indefinitely and when it gets competitive the new construction assets with the same basis as the C class rehab junk will have room to maneuver while the over rehabbed, maxed out rent C class goes back to the bank. It doesn't seem possible that can happen again but it will. There is a real affordability crisis and a renter that qualifies for $1300 rent must gross $45k/year. If your business plan is banking on average rents of $1300 in a demographic where median income is half that do you see how that can be a problem?

    The people who say its a great idea to buy a rehab at 3% cap in a gentrifying opportunity zone area are the 2019 version of the SFR investor of 2006. Take a hard look at SFR rents in said gentrifying opportunity zone and ask yourself if people will pay the same rent for rehabbed one bedroom apt as a 3-4 bedroom house around the corner. Ask yourself if your end buyer will pay the average regional SFR median price for 1-2 bd apartments in one of the lowest county median income regions. Be careful who you listen to on BiggerPockets. You will not hear @Brian Burke boasting about his latest 3 cap deal.

    4Reply
  • Tim Gara
    Real Estate Agent · Gilbert, AZ · Member since 2019 · 3 posts · 1 vote
    6y

    I’m a local resident in Gilbert and have some reservations about Mesa’s downtown revitalization efforts. I went for a night out on a Saturday to downtown Mesa and it was a ghost town. The restaurants and shops were empty. I was perplexed because clearly a lot of money went into improving the area but consumers seemed to shrug. Mesa’s downtown would be low on my list for a day/night out behind Gilbert’s, Chandler’s, or Scottsdale’s downtowns. Mesa is heavily retirees and low wage labor which may explain why it’s quiet on weekends. Also, the light rail may be a liability to the area as the vagrants get transported there. On the plus side, baseball spring training and access to Tempe benefits Mesa’s location. 

    1Reply
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    looks like the thread died down, but what are your thoughts on this? 

    "Fannie Mae reports $70B of multifamily financing in 2019"
    https://seekingalpha.com/news/3532509-fannie-mae-reports-70b-of-multifamily-financing-in-2019

    0Reply
  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    6y

    New construction in many markets is over-saturating the A-Class properties, creating massive affordability issues. 15,000 units in the pipeline in 2020 and 150,000 needed by 2030, means that Phoenix at this time is on track to be a perfectly balanced market. Also the demand predictions may not be as accurate as you think. Phoenix may "need" 150,000 new units, but what percentage will be apartments vs SF/condos and how will that demand shift as apartments become less affordable?  

    0Reply
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