May 4, 2023

Phoenix 1Q23 Multifamily Market Insights: Vacancy flat in response to heightened absorption

Highlights:

Operational performance in the Greater Phoenix multifamily market was fairly steady to start 2023. Vacancy was flat and rents inched lower by a few dollars per month. The pace of new development is forecast to accelerate in the coming quarters, which should lead to increases in the local vacancy rate.
After rising throughout 2022, vacancy stabilized in the first quarter of this year. The rate held steady at 6.4%, matching the figure at the end of last year. During the past 12 months, vacancy has pushed up 160 basis points.
Rents ticked lower in the first quarter, dipping to $1,614 per month. This followed a sharper decline at the end of 2022. Year over year, average rents have dipped 0.6%, although many suburban submarkets have recorded more significant declines.
Investment activity remained light at the start of this year, although there was an uptick in activity in March, particularly in sales over $90 million. Cap rates trended higher, reaching an average of 5.3%. The median price has retreated, totaling $233,700 per unit year to date.