- The Phoenix MSA continued to lead the nation in rent growth rising 8.1 percent y/y to $1,235, nearly three times higher growth rate than the national average of 2.9 percent but still well below national average rent of $1,475.
- Occupancy rates continue to remain elevated at 95.1 percent, despite decreasing 40bps over-the-year, and marks the 33rd consecutive quarter occupancy has been above the 20-year average of 91.6 percent.
- Approximately 1,400 units came online over Q1 2020, which is below the 2,000 unit moving 3-year delivery average.
- Given the current construction rate, 2020 should prove to be the highest delivery amount since 2009’s 9,315-units.
- There are approximately 18,772 units currently under construction throughout Greater Phoenix, the highest amount since Q1 2018’s 17,895, and marked the 24th consecutive quarter where the number of units under construction was above 10,000.
- Investment sales volume decreased 37 percent over-the-year to $1.18B across 28 transactions, with average price per unit increasing nearly 28 percent to $189,185.
Outlook: At this point, Covid-19’s potential impact on both the real estate industry, and market overall, remains to be seen. While we may not have firm data as to the full extent of this disruption, make no mistake that its impact will be significant, as witnessed in the nearly 26M+ national unemployment claims, although not expected to be long term.
The biggest impacts observed thus far, aside from unemployment claims, have been relegated to capital markets and retail. With regards to capital markets, lenders have been widening spreads which has, in turn, impacted interest rates. The near-term interest rate spread increase can, and should, be attributed to the volatility of the virus’ spread and government steps to contain it. Nonetheless, the Federal Reserve has continued to provide the market necessary liquidity which bodes well for real estate.
While the near-term employment picture is, in a word, terrible; it is helpful to note that the economic drivers that have kept Phoenix at the top of job and population growth are still in place. Not only did the Phoenix MSA lead the country in job growth going into the crisis, rising 3 percent+ in January/February, but has continued to diversify since 2010.