A rendering of Proxy333, one of Phoenix’s many recent luxury apartments.
Valley posts high percentage of luxury apartment construction
Cranes are everywhere in Downtown Phoenix and around the Valley as development continues to explode. But what exactly are they building? Chances are it’s some sort of luxury development, whether it’s apartments to rent or condominiums to buy.
These high-end multifamily properties seem to have always popped up in Scottsdale, but Phoenix especially has enjoyed a boom.
Phoenix had 18 new rental properties open in 2015. What makes those openings unique on the national stage is that 95 percent of the new developments are deemed “luxury.” It put Phoenix at No. 2 among mature metros in the country for the percentage of high-end units. Scottsdale, in particular, had 100 percent luxury rental new-builds.
Proxy333 opened in Downtown Phoenix recently. Photos by Jesse A. Millard
According to a RENTCafé study, Phoenix saw an 800 percent increase in high-end multifamily properties from 2012 to 2015. This trend isn’t just in Phoenix, it’s national, as 75 percent of all new apartments built in 2015 were high-end, according to the study.
But it’s not just luxury residential developments that are exploding, but the residential space as a whole. In his April State of the City Address, Phoenix Mayor Greg Stanton said there are 3,500 residential units in the pipeline or under construction. That’s a big number.
An ASU W.P. Carey School of Business Economic report released in mid-May shows the same sort of growth the mayor talked about. The report said Arizona’s economy is currently in the boom, while warning that growth will be much slower in the future.
The outlook still looks great for apartments, though. Elliott Pollack, one of the authors of the ASU report, said the outlook for apartments in the future is “excellent.”
Everyone has been hearing about Millennials packing up the car to move into the hippest city centers around the country, with Phoenix being no different. Yet, Baby Boomers have been doing the same, said Tracy Hoskins, director of development services at Walt Danley Realty.
Boomers and Millennials alike want the ease of access, walk ability and a vibrant lifestyle that high-end downtown living brings, Hoskins said.
It’s no longer just the young professional singles and couples we might have thought were traditionally drawn to that, she said. People, Baby Boomers included, want a walk-and-leave lifestyle that allows them to live in an urban lifestyle. These desires have been driving the demand, she said.
“(Baby Boomers) are just kind of tired of the huge lawns to take care of,” she added. “They dont want to spend their weekends at Home Depot.”
The increase of growth has been a response to the growing demand for homes in downtown areas, Hoskins says.
Downtown Phoenix isn’t as grungy as its reputation was only a few years ago. Downtown Phoenix has become vibrant and folks are noticing. Bryan Fasulo, regional property manager at Pinnacle Property Management Services, said these high-end developments are revitalizing the area, turning Phoenix into a true downtown.
“I was flabbergasted when I moved to Phoenix in 2001 and saw our downtown,” said Fasulo, who moved here after stints in New York and the Bay Area. “I was like, ‘What do you mean people don’t hang out downtown?'”
Phoenix and Tempe have also become tech hubs and employees relocating to Arizona have been filling up the higher-end developments, Fasulo said.
Luxury isn’t what it used to be
These new high-end luxury developments aren’t like they used to be either, Fasulo said. Twenty years ago, luxury in a multifamily property just meant fancy finishes, Fasulo explained, but it’s way more than that now. It’s a lifestyle.
Work life isn’t nine-to-five anymore. When folks get home, they just want to relax without a care in the world, so their home is starting to take care of them, Fasulo said.
Many luxury communities take extra steps to care for its residents. The Standard, a new Scottsdale luxury apartment complex is partnered with the Hotel Valley Ho to give its residents pool, spa and room service access.
The Millennials moving into these places especially have this sentiment. They’re the on-demand generation
who grew up on the Internet. As they enter adult life, Millennials want immediate services in their homes, too, Fasulo explained.
With things like concierge services, on-site fitness studios and residential activities, the face of a luxury complex is changing. Residents also want to be able to walk out of their home to the hottest restaurant in town.