How is Phoenix Fairing in the Multi-Family Sector?
2018 saw a new record broken for apartment sales in Phoenix: gross volume of over $6.2 billion throughout the entire year, $1.1B higher than the previous record from 2016! Another new all-time high is average price per unit at $145,000, 27% higher than the previous year. As of late February, price per unit was up 7.5% to $156,000. Capitalization rates continue to feel some downward pressure as prices continue to grow, dropping a full 100 basis points from 2018 to 5.7%.
As we’re closing in the on the first quarter this month, nearly $1 billion in apartment sales have been recorded, according to CoStar; and that’s not considering the sales not accounted for yet, due to the lag times between sales and deed recordings and the update in CoStar’s system. Assuming the market continues throughout the year as first quarter has proven, it’s likely Phoenix could see another record-shattering year, possibly as high as $8 billion in gross apartment sales volume.
Ranking in the top 10 for population, job growth and rent among the major national markets has granted Phoenix strong indicators for an influx of relocators. Every month, the economic powerhouse sees thousands of migrants, mostly retirees and employment-seekers, regardless, driving apartment demand higher at a time when construction is booming. Total number of new units completed reached a cyclical high last year and new apartment construction is only projected to grow throughout 2019.
All the while, vacancy rates are continually compressing to near historical lows this first quarter as demand refuses to cease. Phoenix will continue to steal the attention from multifamily investors across the nation as it continues to generate some of the best year-over-year apartment rent growth the U.S.