Vacancy rates remain low despite the ongoing delivery of new high-end multifamily units.
As long as vacancy remains in check, the multifamily market will remain strong in the Valley, which reports the average volume and sale price per unit is higher than 2007’s peak.
Metro Phoenix set a new record for multifamily last year for year-to-date transaction volume totaling $4.5 billion. Newer multifamily developments provide residents from Baby Boomers to Millennials with the location, amenities and things to do that facilitate a true live-work-play lifestyle.
Chapin Bell, CEO of P.B. Bell, thinks concerns about overbuilding will be temporary because the flow of capital and debt into multifamily projects will be slower, construction costs will rise and rent growth with decelerate.
“These factors are reducing the returns and thus making it more difficult to underwrite new development deals, which should impact the number of new transactions added to the pipeline,” he explains.
While downtown areas in Scottsdale, Tempe and Phoenix are still prime locations for multifamily projects, Steve Pritulsky, president and CEO at Watt Communities of Arizona, predicts, “soaring land prices in core submarkets will push new multifamily development out to first ring suburban locations – vibrant, growing communities with great amenities and land parcels that can be secured for as much as half the price of sites in core areas.”
This is the approach with View 32, a rental apartment community that the company will begin this year within the North 32nd Street Corridor.