The Phoenix multifamily market continues to face challenges from a persistent imbalance between supply and demand. Despite strong renter demand, with 17,000 units of net absorption over the past year, more than double the pre-COVID five-year annual average, an unprecedented wave of construction has kept vacancies elevated and rent growth negative. Builders delivered 23,000 net new units over the past 12 months, more than triple the average annual completions from 2015 to 2019, driving overall vacancy to 12.4 percent and keeping it above pre-COVID norms. Another 23,000 units are under construction, making Phoenix one of the nation’s most aggressively built apartment markets, particularly in high-growth areas like Downtown Phoenix, Tempe, and the Southwest Valley.
The influx of new supply has intensified competition, putting pressure on rents and prompting concessions. Annual asking rents have declined 3.4 percent over the past year, with more than 60 percent of communities offering discounts. Properties in lease-up frequently provide six to eight weeks of free rent, with some extending offers to 10 or 12 weeks, reflecting the challenges landlords face in absorbing the elevated inventory despite healthy demand.
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