Investors Want In on Phoenix’s Rent Growth, Robust Apartment Demand

Article originally posted on CoStar on April 5, 2021

Daily asking apartment rents in Phoenix continue their upward climb, and there are no immediate signs of it slowing.

Rents are now more than 8% above January 2020 levels, compared with just a 1% increase nationally. Unwavering rent growth has caused some affordability concerns, but investors are still bullish on the Phoenix market, and sales volume has beat pre-pandemic averages over the past several months.

Impressive rent growth has been made possible by robust demand for affordable living, one of Phoenix’s top competitive advantages that drives more than 200 new residents to the Valley each day.

The extension of remote work will continue to attract new residents from dense and expensive markets such as San Francisco and Los Angeles. In the first few months of the year, searches for Phoenix rentals on have soared, and that should continue to materialize into new leases.

Apartment demand in the first quarter of 2021 outpaced new supply and put downward pressure on the market’s already low vacancy rate. The suburbs are outperforming, but availabilities are even compressing in downtown communities as well. The supply pipeline, however, is sizeable, and vacancies are expected to edge higher over the next few quarters as the more than 17,000 rentals underway deliver.