Colliers 3Q Report: Multifamily Sales Spike in Phoenix with Momentum Gaining in Tucson

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colliers_logoTucson Multifamily Report Q3 Vacancy Drops, Even as New Units Come Online

Colliers International has released its Q3 Multifamily Report on Tucson and Phoenix. Here are the highlights:                   

>> Vacancy in the Tucson metro area ended the third quarter at 8.2%, improving 90 basis points from the second quarter. The rate is now 110 basis points lower than one year ago and vacancy has been below 10% in 12 of the past 13 quarters.

>> Asking rents ended the third quarter at $636 per month, 0.2% higher than one year ago. The impact of newer, more expensive units being delivered to the market could influence overall rent trends, particularly at the high-end of the market. Units built in the past few years feature asking rents approaching $1,100 per month.

>> Sales velocity continued to gain momentum in the third quarter, increasing approximately 10% from second quarter levels. With investors increasingly targeting performing secondary and tertiary markets, transaction activity in Tucson could continue to accelerate in the months ahead.

>> The median price in transactions closed year to date is $41,200 per unit, up more than 60% from the 2013 median. The last full year where the median price in Tucson closed over $40,000 per unit was 2008.

To read the full Tucson Q3 Multifamily Report: Tucson Multifamily Market Report 3Q14_

Phoenix Multifamily Report Q3 – Vacancy Trends Lower and Sales Spike for Second Consecutive Month

Phoenix highlights include:

>> Vacancy fell from 6.9 % in the second quarter to 6.5% in the third quarter as renter demand remained strong. The local vacancy rate is 90 basis points lower than one year ago, and has been retreating at a pace of approximately 100 basis points per year since early 2011.

>> Vacancy has tightened even as developers have delivered new units to the market. Net absorption has now been positive in each of the past 11 quarters, during which time, renters have moved into a net of nearly 12,000 units. Net absorption for the third quarter alone reached almost 1,900 units.

>> Rents continue to trend higher in response to healthy demand for units and tightening vacancies. Metrowide asking rents have increased 2.9% in the past year to $807 per month. In low-vacancy submarkets such as South Scottsdale, North Paradise Valley and South Tempe, annual rent gains are in the 5% – 6% range.

>> Sales activity spiked for the second consecutive quarter, increasing 17%. Year to date, transaction velocity is up 13% from the same period in 2013. It is common for activity to peak in the fourth quarter, and current indications suggest healthy activity levels are likely to close the year.

>> Improving fundamentals are helping push prices higher. The median price year to date is $77,700 per unit. The median price in the third quarter alone was nearly $94,000 per unit.

To read the full Phoenix 3Q Multifamily Report: Phoenix Multifamily Market Report 3Q14