— By Brett Meinzer of MMG Real Estate Advisors —
Despite ongoing challenges, Phoenix’s multifamily market is showing signs of stabilization and strength in key areas.
Record Demand, Even in a Cooling Market
In first-quarter 2025, net absorption reached 5,149 units, more than double the 10-year quarterly average and the second-highest quarterly total on record. On a 12-month basis, the market absorbed 18,413 units, setting a new high.
“We’re seeing demand return to peak levels,” said Brett Meinzer, advisor at MMG Real Estate. “The number of units leased in the last year shows Phoenix’s long-term story remains intact.”
Supply Is Slowing, Signaling Potential Stabilization
While new supply remains elevated, the pace is shifting. First-quarter deliveries declined 36 percent from the prior quarter, and the development pipeline is now nearly 50 percent below its recent peak.
“After years of heavy deliveries, the pipeline is thinning,” Meinzer said. “This pullback could help stabilize rent and occupancy rates as we head into 2025.”
Rent Trends Still Negative But Improving
Phoenix’s effective rent currently stands at $1,560, down 2.3 percent year over year, with average occupancy at 91.9 percent. Rent softness is largely driven by concessions and intense lease-up competition from new construction.
However, the rate of decline is slowing, and modest rent growth is forecast in 2025 as supply-side pressure begins to ease.
Key Takeaway
Demand in Phoenix is proving incredibly resilient even as the market works through pricing corrections. With new supply slowing and rent contraction beginning to moderate, investors may find this an opportune time to strategically position for the next growth cycle.
— By Brett Meinzer, Advisor, MMG Real Estate Advisors. This article was originally published in the June 2025 issue of Western Real Estate Business.