Phoenix apartment market may be peaking
- Kristena Hansen
- Reporter- Phoenix Business Journal
-
Concerns are mounting that metro Phoenix’s apartment market may becoming oversaturated, signaling the sector’s recent boom could be starting to run its course.
These fears came up in Arizona State University’s Broker’s Forum Report this week, a new quarterly commercial real estate market report that recaps a roundtable discussion of local, but anonymous, industry professionals hosted by the W.P. Carey School of Business. The report includes commentary from the brokers, who prefer their identities not be disclosed so they can speak more freely.
Forty percent of the brokers said they expect apartment vacancies to increase within the next three months, while 45 percent say vacancies will stay the same, the report said.
According to Hendricks Berkadia, apartment vacancies Valleywide ended the year at 6.7 percent — down slightly from 7 percent a year prior.
One broker noted that the “big concern” is the fact that 3,200 units were delivered during the last half of the year and another 3,500 are expected to come online within the next six months — almost all of which are located in the East Valley.
“We have interviewed the top six management companies in town ... Foot traffic is flat. They’re concerned,” one broker said. “This is the time when they see peak leasing in the marketplace. Third or fourth quarter, and first quarter of the year, and they’re very concerned.”
Even Pete Bolton — head of Newmark Grubb Knight Frank’s Phoenix office who also moderates the ASU broker forum — said the Valley multifamily market is becoming “very oversaturated” at NAIOP’s Real Estate Outlook event at the Phoenician on Jan. 9.
Despite their cautious outlook on vacancies, brokers’ opinions on rents were more polarized.
For instance, 45 percent believe apartment rents will stay the same this quarter.
“From an owner’s perspective it is really going to be down, because if we see concessions come back in to the marketplace ... they’re getting less money,” one broker said.
But another 40 percent were adamant rents would continue climbing, and Hendricks Berkadia tended to agree, projecting the Valley’s 2013 average rental rate ($819) will climb to $881 by 2015.
When speaking of the overall market, the brokers concluded commercial real estate was in recovery mode, albeit a slow one due to poor consumer confidence, government uncertainty and the housing market losing some steam.
As one broker put it: “It’s just limping along, but it’s not going backwards.”
Kristena Hansen covers residential and commercial real estate.
Concerns are mounting that metro Phoenix’s apartment market may becoming oversaturated, signaling the sector’s recent boom could be starting to run its course.
These fears came up in Arizona State University’s Broker’s Forum Report this week, a new quarterly commercial real estate market report that recaps a roundtable discussion of local, but anonymous, industry professionals hosted by the W.P. Carey School of Business. The report includes commentary from the brokers, who prefer their identities not be disclosed so they can speak more freely.
Forty percent of the brokers said they expect apartment vacancies to increase within the next three months, while 45 percent say vacancies will stay the same, the report said.
According to Hendricks Berkadia, apartment vacancies Valleywide ended the year at 6.7 percent — down slightly from 7 percent a year prior.
One broker noted that the “big concern” is the fact that 3,200 units were delivered during the last half of the year and another 3,500 are expected to come online within the next six months — almost all of which are located in the East Valley.
“We have interviewed the top six management companies in town ... Foot traffic is flat. They’re concerned,” one broker said. “This is the time when they see peak leasing in the marketplace. Third or fourth quarter, and first quarter of the year, and they’re very concerned.”
Even Pete Bolton — head of Newmark Grubb Knight Frank’s Phoenix office who also moderates the ASU broker forum — said the Valley multifamily market is becoming “very oversaturated” at NAIOP’s Real Estate Outlook event at the Phoenician on Jan. 9.
Despite their cautious outlook on vacancies, brokers’ opinions on rents were more polarized.
For instance, 45 percent believe apartment rents will stay the same this quarter.
“From an owner’s perspective it is really going to be down, because if we see concessions come back in to the marketplace ... they’re getting less money,” one broker said.
But another 40 percent were adamant rents would continue climbing, and Hendricks Berkadia tended to agree, projecting the Valley’s 2013 average rental rate ($819) will climb to $881 by 2015.
When speaking of the overall market, the brokers concluded commercial real estate was in recovery mode, albeit a slow one due to poor consumer confidence, government uncertainty and the housing market losing some steam.
As one broker put it: “It’s just limping along, but it’s not going backwards.”
These fears came up in Arizona State University’s Broker’s Forum Report this week, a new quarterly commercial real estate market report that recaps a roundtable discussion of local, but anonymous, industry professionals hosted by the W.P. Carey School of Business. The report includes commentary from the brokers, who prefer their identities not be disclosed so they can speak more freely.
Forty percent of the brokers said they expect apartment vacancies to increase within the next three months, while 45 percent say vacancies will stay the same, the report said.
According to Hendricks Berkadia, apartment vacancies Valleywide ended the year at 6.7 percent — down slightly from 7 percent a year prior.
One broker noted that the “big concern” is the fact that 3,200 units were delivered during the last half of the year and another 3,500 are expected to come online within the next six months — almost all of which are located in the East Valley.
“We have interviewed the top six management companies in town ... Foot traffic is flat. They’re concerned,” one broker said. “This is the time when they see peak leasing in the marketplace. Third or fourth quarter, and first quarter of the year, and they’re very concerned.”
Even Pete Bolton — head of Newmark Grubb Knight Frank’s Phoenix office who also moderates the ASU broker forum — said the Valley multifamily market is becoming “very oversaturated” at NAIOP’s Real Estate Outlook event at the Phoenician on Jan. 9.
Despite their cautious outlook on vacancies, brokers’ opinions on rents were more polarized.
For instance, 45 percent believe apartment rents will stay the same this quarter.
“From an owner’s perspective it is really going to be down, because if we see concessions come back in to the marketplace ... they’re getting less money,” one broker said.
But another 40 percent were adamant rents would continue climbing, and Hendricks Berkadia tended to agree, projecting the Valley’s 2013 average rental rate ($819) will climb to $881 by 2015.
When speaking of the overall market, the brokers concluded commercial real estate was in recovery mode, albeit a slow one due to poor consumer confidence, government uncertainty and the housing market losing some steam.
As one broker put it: “It’s just limping along, but it’s not going backwards.”
Kristena Hansen covers residential and commercial real estate.
