Phoenix Multifamily Market Paused In Late '16

The greater Phoenix multifamily market enjoyed a strong 2016, but activity experienced a lull in the fourth quarter, with an uptick in vacancy and slower rent growth, according to new data from Colliers International.

Courtesy of Colliers International

The pause has not discouraged investors, if the property is right. Recently Canadian investor Janet LePage-Western Wealth Capital snapped up the 152-unit Sunpointe apartments at 7077 West McDowell Road in west Phoenix — for $10.8M from L.A.-based BH Properties.

“The neighborhood is particularly strong in terms of multifamily occupancy, and the Sunpointe property is in excellent condition with opportunity for value-enhancing improvements,” said Colliers International executive vice president Bill Hahn of the greater Phoenix office. He's here with colleagues Trevor Koskovich (left) and Jeff Sherman (right), who together facilitated the deal.

Sunpointe, which was built in 1984, consists of 10 apartment buildings containing 152 units. The one- and two-bedroom apartments offered at Sunpointe were 93% leased at the time of the sale.

Courtesy of Colliers International

According to Colliers International, Q4 2016 brought a slight increase in multifamily vacancy in the Phoenix area, bringing the figure to 6%, up from 5.7% a year ago, and marking the first annual vacancy increase in the market since 2009. The current vacancy is 300 basis points below the market’s long-term average, and absorption of units remains strong.

During 2016, more than 5,800 units were completed following the boom year of 2015, when nearly 7,400 apartments were delivered to the market. About 8,200 units are underway and an estimated 7,000 of those will be completed this year.

That volume of new product has put a little downward pressure on rents. Rates are increasing across all segments of the multifamily market, but they rose in the last three months of '16 at a slower pace than in preceding quarters. Asking rents ended the year at $931/month, which is 6.8% higher than year-end 2015.

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