There may be up to 5,000 multifamily units in Phoenix's hopper this year, but it's no cause for panic. Fundamentals certainly support the new construction, according to JLL VP Charles Steele. “Historically, Phoenix absorbs one multifamily unit for every nine jobs created,” he says. So if the city continues to generate 45,000 jobs annually, it’ll easily absorb all the units slated for delivery. (Though from this picture, his daughter appears to be skeptical.) He says Phoenix is building to a solid equilibrium, and as a whole, the multifamily market’s 95% occupied (and up to 97% for the best product in best locations). The hottest markets: Downtown Tempe, Tempe Town Lake, South Chandler (specifically the Price Road Corridor), North Scottsdale, and Downtown Scottsdale.
Rents are rising but at a sustainable pace, says Charles. The first new multifamily projects to deliver in these hot areas have fared well—in some cases even snapping up higher rents than previously achieved. He says to keep an eye on projects like Alliance Residential and JP Morgan’s Broadstone Waterfront (pictured) and TDI Real Estate’s Jefferson at One Scottsdale (both in Scottsdale) and Hanover Co’s yet-to-be-named project on Mill Avenue in Downtown Tempe. Charles isn't just casting his rod for multifamily investors; the avid sportsman always finds time for fishing while on vacation, whether fly fishing in the San Juan Mountains, sport fishing in the Keys, or in Ontario looking for northern pike. He grew up fishing with his dad and is happy to continue the tradition with his three kids.
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