Tom Simplot, president and CEO of the Arizona Multihousing Association, has watched the hottest commercial sector light the way for new developments during the darkened years of recovery. Even though there are thousands of new units in the pipeline, Simplot weighs in on the cooler markets, the Class-A flood and important legislative wins.

With the increased interest in mixed use developments, Which usually include apartments, are developers hoping to piggyback on multifamily’s success to jump-start the rest of the sectors?

If the old saying that “first comes rooftops” has any bearing, then, yes, after the construction of several thousand new multifamily units throughout the metro area, it will cause at least some level of new construction activity in office and retail. We have probably seen the end of “silo development,” where commercial, apartment or home builders work in a vacuum. There is now incredible motivation to create partnerships to build mixed-use projects and add value to the development. People want to live, work and play in the same vicinity. Everyone wins.

How will rising rental rates affect dense urban areas such as phoenix?

The new units being built throughout Phoenix are almost all Class-A properties, with incredible amenities and design elements. These new properties are also pushing rents to all-time highs. The question is probably more about the depth of this market and how many units can sustain the new, higher rents. So far, the lease-ups of these new communities have been fairly rapid and successful. By adding to the overall stock of housing, we add new options for families and maintain affordability. Our housing is still relatively inexpensive compared to other major cities, so instead of building a lot of new affordable housing stock in this cycle, our aging stock becomes the next affordable housing option. It may not be ideal, but in the current market, it is our reality. During the Great Recession, most of the new multifamily communities in Arizona were built with tax credits and government assistance. Until the legislature is able to restore funding to the State Housing Trust Fund, affordable housing development is a tough business.

How are northern and southern arizona markets?

Flagstaff is a hot market. Go anywhere in Flagstaff and the neighborhood chatter turns to how many student apartments are being built. The need for student housing has been the driver, but thanks to shifting consumer trends, we are starting to see market rate housing under construction as well. Tucson is coming back, but, historically, the Tucson market never reaches the highs (or the lows), of Phoenix. Vacancy rates are a little higher in Tucson, and that probably won’t change much given the new communities (and competition) that are coming on the market.

Is there a buzzing around the multifamily sector that you think Will get louder over the next 12 months?

What we see under construction in Scottsdale, Tempe, Chandler, Gilbert and parts of Phoenix has been on the planning books for several years now. We continue to play catch-up after the dark years of the Great Recession, and since the Phoenix area has not yet reached post-recession growth like other Western cities, we are nowhere near the end of this building cycle. The biggest challenge is probably finding affordable land to assemble for new projects in the future.

Have there been any major legislative Wins backed by ama for the multifamily sector in the last year?

The past few years have been fairly good for the apartment industry when it comes to government oversight: Local red-tape was preempted with regard to energy benchmarking; there is now a choice when it comes to selecting a solid waste hauler and how and when to recycle within an apartment community; and an apartment owner/manager seat has been added to the Real Estate Advisory Board. We work very closely with all Arizona cities and towns as they review new building codes and are vigilant to ensure that safe, affordable and well- designed apartment housing remains the norm.