The Phoenix apartment market is seeing new development in response to strong demand, and investors nationwide are interested in all that new product, JLL VP Charles Steele tells us.
Charles expects Phoenix multifamily demand to gain strength in the next 12 to 24 months: "We're building more institutional-grade product in Phoenix than ever before, and while REIT activity remains somewhat limited, the new construction is attracting institutions at a tremendous rate. That puts Phoenix multifamily on a very strong, long-term growth plane."
In a recent off-market deal, Denver-based Simpson Housing purchased the 322-unit Jefferson on Legacy in Scottsdale. JLL Capital Markets brought the new buyers to the table after securing JV capital for the project in late 2013; JLL joined the project’s developer, JPI, with AEW Capital Management, to capitalize the project. Charles and EVP John Cunningham led the JLL team on both the buy-side and JV equity transactions.
In its Q3 Phoenix Multifamily report this week, Colliers International says the metro vacancy rate has dipped below 6%, and asking rents are rising at a healthy pace (7.4% higher than a year ago). The outlook for this year and '16 remains quite strong. Net absorption is being fueled by an expanding jobs market and a homeownership rate that is well below the pre-recession peak. Investor interest is piqued: Sales velocity accelerated by 7% in Q3, and activity for 2015 is on pace to reach the highest total since 2006-2007.
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