— By Brett Polachek of Newmark —
Phoenix’s multifamily market experienced dynamic shifts in 2024, driven by strong population growth, economic expansion and single-family cost of ownership. Phoenix remains a top relocation destination, with a population growth rate of 1.8 percent (+85,000 residents), nearly double the national average of 0.98 percent. This influx is supported by the addition of more than 52,000 jobs from October 2023 to October 2024. Phoenix also has the fifth healthiest rent-to-income ratio among 30 major U.S. markets that we sampled.
Demand for multifamily housing reached record levels, with 14,528 units absorbed annually, marking the strongest performance since 1994. The supply experienced an annual increase of 6.4 percent as 19,835 units delivered last year. The far West Valley submarkets of Avondale, Goodyear and West Glendale led supply growth, adding 6,100 units to their inventory.
The market showed resilience despite this historic supply wave. Occupancy rose 1 percent year over year to 93.7 percent, while Class B units clocked in a 94 percent occupancy rate. This was followed by Class A at 93.8 percent and Class C at 93.2 percent. These figures remain slightly below pre-pandemic levels, but they reflect a strong recovery trajectory.
Asking rents in Phoenix declined by 2.7 percent year over year in 2024, indicating adjustments amid rapid inventory growth. However, rents remain significantly higher than pre-pandemic levels; they were still up nearly 30 percent compared to fourth-quarter 2019. This long-term growth underscores the strength of the Phoenix market’s fundamentals — and its appeal to both renters and investors.
Looking ahead, challenges remain with around 21,000 units expected to be delivered in 2025. Phoenix’s economic strength, built upon by continued job growth and in-migration, is expected to stabilize market conditions. Modest rent and revenue growth are anticipated in the coming year, reaffirming Phoenix’s position as a premier multifamily investment market.
— By Brett Polachek, executive managing director of multifamily investment sales, Newmark. This article originally appeared in the January 2025 issue of Western Real Estate Business.