As many companies transitioned to remote work, Phoenix has seen a significant in-migration from residents leaving overpriced metros in California, in search of more affordable alternatives. At the same time, local officials have worked to create a business-friendly environment that has attracted attention from big employers such as Google, Amazon and several life sciences companies.
Phoenix’s multifamily market fared well under the effects of the pandemic and closed 2020 as the best-performing market in terms of transactions. This confidence in the metro was also visible in the pipeline. Last year, roughly 17,800 new units were added to the inventory. There were 116 projects totaling 27,300 units underway in the metro as of February, according to Yardi Matrix data. That’s 8.5 percent of completed inventory, with the top five submarkets accounting for more than half of all construction activity in the metro, at 54 percent. Most of the new communities cater to upscale renters. Here’s a list of the most active submarkets in Phoenix in terms of multifamily development activity.
5. Deer Valley
With eight projects totaling 1,843 units currently underway, Deer Valley comes in fifth. Hines is developing the submarket’s largest project, the 325-unit Happy Valley Residences. According to Yardi Matrix data, Western Alliance Bank originated $40.2 million in construction financing last November for the luxury property. The project is taking shape at the northwest corner of Happy Valley Road and 35th Avenue in Phoenix and is expected to come online in 2022.
4. North Tempe
The submarket has the lowest percentage—10 percent—of units underway as a percentage of stock from the list. Of the nine properties totaling 2,254 units currently under construction in the submarket, three have an affordable housing component included.
The largest development in the submarket, and the third largest in the Phoenix market, is the 587-unit The Pier in Scottsdale, Ariz. Located at 1190 Vista Del Lago Drive, the development is part of the city’s objective to combine multifamily development with office and retail space in order to revitalize the area and transform it into a modern urban living district. The project will be situated on the south bank of Tempe Town Lake.
3. Western Suburbs
The submarket is expected to grow its multifamily inventory by 3,216 units in the coming months. Of the 13 properties currently underway, Acero Algodon Center in Phoenix is the largest. At the beginning of 2020, Pacific Coast Capital Partners originated a $49.2 million construction loan for the development of the 458-unit project. IDM Cos. is very active in the metro; the company delivered 3 properties in 2020 and has another two projects in the planning and permitting stages.
As of February, there were 3,248 units under construction in the submarket. All 11 multifamily projects are geared to upscale renters.
The Crossing at Cooley Station is a luxury development taking shape at 3700 E. Williams Field Road in Gilbert, Ariz., with Wells Fargo Bank providing $49 million in construction financing. The 408-unit property will take shape less than 3 miles from Gilbert Medical Campus. Developer Management Support already owns almost 2,900 units in Phoenix and 504 in the submarket.
1. Sky Harbor
Even though a lot has been said about the fall in popularity of urban cores, Phoenix’s Sky Harbor has remained the most active submarket, with almost 4,200 units currently underway as of February. The 16 projects make up almost half of the submarket’s total stock. Sky Harbor is home to the upcoming Phoenix Biomedical Campus innovation center, which will be anchored by Arizona State University.
The largest project in the submarket, and the second-largest project currently underway in the metro, is The Fillmore. The partially affordable project will comprise 609 units and will be less than a mile away from Arizona State University. High Street Residential’s mixed-use project will also include ground-floor retail space and is expected to come online at the end of 2022.
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