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Market Report

Phoenix Multifamily Investment Forecast

2022 Outlook

Scorching Rental Market Met With Historic Pipeline;
Institutional Activity on the Rise

Phoenix positioned to register outsized rent growth again. Several indicators showcase the impressive demand tailwinds in Phoenix. The market is projected to add nearly 50,000 households this year, growing at a pace more than twice as fast as the national average. Robust in-migration is the driving force, with many individuals and families relocating from colder weather climates or more expensive metros along the coasts. At the same time, the local economy is welcoming. The job total surpassed the pre-recession crest by the third quarter of 2021, yet the unemployment rate held above 5 percent, keeping job availability elevated and leaving room for further gains. This multitude of demand drivers is catalyzing remarkable rent growth amid very tight vacancy. Phoenix was one of only three major U.S. metros to record an annual rent increase exceeding 20 percent in 2021 and will remain near the top of the pack this year. Nonetheless, completions in 2022 will practically double the previous annual peak across the past two decades, putting some upward pressure on vacancy. The additions are necessary, however, as availability entered 2022 more than 100 basis points below the next-lowest year-end rate going back to the turn of the century.

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