Perhaps a tribute to the metro’s name, Phoenix’s multifamily market remained as a solid performer throughout the pandemic. The metro had the second highest annually effective rent growth in the nation in 2021, increasing 28.6%. Furthermore, the Phoenix MSA was the only market among the top 10 in the nation to see an increase in multifamily construction starts in 2020. In fact, the metro has seen a steady increase in deliveries since 2020, underpinned by historical demand in 2021. In 2022, nearly 14,600 units went online in the market, just under triple the amount of the pre-pandemic 10-year average.
Looking ahead at the rest of 2023, the Phoenix market is projected to have 20,083 units absorbed by year-end, the third highest in the nation. Meanwhile, they are slated to have the second most units to come online in the nation by the end of 2023 as well, with over 27,300 apartment deliveries.
Part of Phoenix’s multifamily success is due to the amount of new residents it attracts. From 2020 to 2022, the Phoenix metro has had the highest amount of net in-migration in the country, welcoming nearly 154,000 new residents. It is no surprise people are flocking to the Valley of the Sun. The metro is a hub for business, academics and entertainment.
Phoenix is home to eight Fortune 500 companies, teams in all four major professional sports leagues, and 19 postsecondary institutions, one of which being Arizona State University, notorious for having the biggest undergraduate enrollment in the nation. The lifestyle Phoenix offers its residents is comparable to major markets; yet, effective rent remains below the national average, making the market an affordable desert gem.
As the Phoenix area has exponentially grown becoming a “Zoomtown” in the midst of COVID-19, development and demand has been mainly sourced from the geographically large submarkets outside of the market’s urban core. Specifically, the Avondale/Goodyear/West Glendale submarket has led the metro’s other 22 submarkets in development and demand over the past three years, with 5,001 units absorbed and 5,723 units delivered since 2020.
Furthermore, the Avondale/Goodyear/West Glendale submarket is projected to continue to outperform the others. In 2023, over 5,300 units are forecast to be absorbed, accounting for over a quarter of the total predicted demand for the market. During the same period, nearly 6,800 units are scheduled to come online, about 24.7% of the market’s incoming inventory.