Phoenix Tops in Multifamily Investment

Phoenix Tops in Multifamily Investment

Phoenix remains a top market for multifamily investment.

January 2020

Multifamily investment remains strong across the United States according to Yardi Matrix’s Multifamily National Report. The research, through November 2019, showing the sixth consecutive year with at least 250,000 units absorbed. The 320,000 multifamily units absorbed in 2019 rented for an average of 3.1% more year-over-year, showing the continuing strong demand for apartments as job growth continues,

The Southwest and West are leading the way for multifamily investment fundamentals, with many metro areas exhibiting nearly double the national average of multifamily rent growth. Apartment units in Phoenix are renting for 7.5% more than last year, while Las Vegas and Sacramento are up 6.0% and 5.3% respectively. Southeastern cities are also showing strong performances with Raleigh and Charlotte both experiencing 4.6% rent growth and Nashville growing by 4.5%. Midwestern cities, including Indianapolis, the Twin Cities, and Kansas City are also performing above the national average.

Multifamily Investment: Rents Stable

The Chicago multifamily market is stable yet lags behind Phoenix and other markets.

Both multifamily rent growth and absorption are down slightly from the previous quarter, and rents are down an average of $3 from the previous quarter. However, with some seasonal changes impacting multifamily markets, this is a typical pattern for multifamily and shouldn’t adversely impact multifamily investment. The Pacific Northwest seems to be affected the most by these seasonal changes. Yardi experts expect rents to grow again in 2020.

In the longer term, multifamily rents have grown nearly $100 on average over the last two years, from $1,375 in November 2017 to $1,473 in November 2019. These numbers could continue to grow depending on what level and quality of new product is delivered throughout 2020.

Markets leading the way for year-over-year rent growth include:

  • Phoenix
  • Las Vegas
  • Sacramento
  • Inland Empire
  • Raleigh

For more on multifamily investment, check out this Commercial Property Executive article.

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