The Phoenix apartment market is experiencing a construction boom, particularly in downtown Phoenix, driven by growth in higher education, the bioscience industry, and a vibrant live/work/play environment that attracts young professionals and students. Developers have responded to this demand by adding thousands of luxury rental units, doubling the existing inventory in the area. However, this surge in supply has outpaced renter demand, leading to a significant increase in vacancy rates from 4.9% in 2019 to 12.4% in mid-2024 and a decline in rent growth. To attract tenants, operators are offering substantial rent concessions, and with more than 3,000 additional units under construction, supply-side pressures are expected to persist. Despite these challenges, long-term growth drivers, such as Arizona State University’s new medical school and the expansion of the Phoenix Bioscience Core, remain strong.
