As multifamily rent growth begins to slow among the nation’s biggest markets, a few markets are maintaining their strong performance and driving positive trends over the forecast horizon. Phoenix is one such market in the West region that is expected to outperform due to large corporate investment in the market, a robust employment sector, and under supplied housing.
The Phoenix metro will be one of the nation’s fastest-growing in 2017 thanks to a wave of new business investment and corporate relocations. Many high-paying manufacturing and management jobs are coming to Phoenix drawn by the Metro’s well-educated workforce, low business and living costs, and friendly business environment. Lucid Motors is just one example of a company that will hire 2,000 workers when it completes its electric vehicle factory and Swiss cybersecurity firm Kudelski will move its North American headquarters to Phoenix. The large scale job additions will support strong population inflows, and healthy income gains will propel consumer industries, housing and healthcare. The unemployment rate has fallen to 4.5 percent, well below that of the West.
Phoenix’s diverse employment growth is only further supported by a healthy financial services industry. Since 2011, the Metro’s financial industry has expanded at more than twice the rate of the nation and region. The industry will remain on solid footing as the strong U.S. economy boosts credit demand and relaxed lending standards drive rapid growth in auto and bankcard lending. This will benefit top employers in the Metro such as Wells Fargo, Bank of America, and J.P. Morgan.
Home builders have been slow to re-enter the market in Phoenix due to the significant blowback of the recession. However, in 2017, both single-family and multifamily construction will need to pick up on account of a lack of supply. Permit issuance is trailing household formation by a wide margin and homeowner and rental vacancies are falling. The resulting upturn in building will lift housing-related industries, which account for an outsize share of jobs.
The multifamily sector in the Phoenix Metro will be a top performer in 2017 because it has attracted significant corporate capital that is resulting in robust employment growth as well as a slow growing single-family inventory that is not keeping up with the Metro’s fast population growth.
Click here to read more about how secondary markets like Phoenix are impacting the national multifamily sector in JLL’s Q4 Multifamily Investment Outlook or contact us:
John Cunningham is an Executive Vice President for JLL’s Capital Markets Group. Based in Phoenix, Arizona, John focuses on multifamily transactions throughout the Southwest and oversees a broad range of investment sales and equity procurement for multifamily developers. He is currently engaged in multifamily transactions in Arizona, Nevada, and New Mexico.
+1 602 282 6314 Email John
Charles Steele is a Executive Vice President for JLL’s Capital Markets Group based in Phoenix focusing on multifamily investment sales and equity procurement for multifamily developers throughout the Southwestern United States. He is currently engaged in transactions in Arizona, Nevada, and New Mexico.
+1 602 282 6314 Email Charles