Apartment developers have been active in the Phoenix market attempting to keep pace with demand for housing. But last year, new supply fell short of demand, and vacancies have compressed to a record low. The supply and demand imbalance is present in the single-family sector as well. Low single-family housing inventory has forced new Phoenix residents who would potentially be homeowners into the renter pool, which is supporting rent growth. Multifamily rents have climbed 11.8% over the past 12 months, placing Phoenix second only to the Inland Empire for rent growth in the nation among large markets.
It’s not only housing that is benefiting from the population growth. The industrial market recorded its best year for demand in 2020, as the growing consumer base required more warehouse and logistics space to store and transport goods to Phoenix homes.
Retail leasing also picked up late last year as tenants expanded to areas of the market that are experiencing the most substantial household growth.
While the office sector has struggled during the pandemic, businesses continued to make job announcements in Phoenix last year, citing the large and expanding labor pool as a key driver for their location decision.