Keller Williams Arizona Realty

15333 N Pima Rd., #130

Scottsdale, AZ 85260

T 480.767.3000

F 480.629.5105

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The Metro Phoenix multifamily sector capped off Q2 2016 with a slight increase in vacancy, rising from 5.4% in Q1 2016 to 6.0% at the end of the second quarter. Aside from the Central Phoenix Submarket (6.8%), all submarkets experienced a rise in vacancy with Tempe recording the largest gain, climbing from 5.5% to 8.1% quarter-over quarter. This increase can be attributed to the majority of Arizona State University students vacating in May. Even with this minor ascent in vacancy, the multifamily market continues to show signs of improvement year-over-year, beating the vacancy rate of 6.2% that was in place 12 months ago.

Second quarter absorption followed the same trend, as vacancy posted a negative absorption of 492-units for the Metro Phoenix market. Again, the majority of the negative absorption is due to the 611-units that were vacated in the Tempe submarket this quarter. Arizona State University’s Tempe campus undergrad enrollment improved by ±1,900 students from 2015 to 2016. As more tenants/students are signing nine month leases that coincide with the school year, seasonal occupancy has become increasingly volatile for this college based submarket. This could be the main
contributing factor as to why there was an escalation in negative absorption of 296-units from Q2 2015 to Q2 2016. 

The Central Phoenix (292-units) and East Phoenix (131-units) submarkets recorded the highest levels of net gains in the second quarter. Even though absorption posted negative net gains for Q2 2016, the average asking rent per unit still continued to climb, jumping 2.3% from $900 in Q1 2016 to $921 at the end of the second quarter. This marks the ninth straight quarter in which average asking rent per unit has increased. The Central Phoenix ($1,065 per unit) and West Phoenix ($691 per unit) submarkets logged the greatest gains over this quarter,increasing 3.8% and 3.6%, respectively.

The multifamily sector posted yet another quarter of strong development bringing the year-to-date total count to over 3,200 new units for the year. The bulk of these new Completions came from the Central Phoenix (514-units), Scottsdale (566-units) and Tempe (484-units) submarkets. We are currently tracking 5,924-units under construction and an additional 17,874-units planned for development. The Central Phoenix submarket tops current under construction totals with 2,062-units, while the Chandler/Queen Creek submarket currently has the most units planned at just over 3,600-units.

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KW Phoenix Apartment Group

15333 N Pima Rd., Suite 130

Scottsdale, AZ 85260

T 623.466.5849

F 480.629.5105

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