Phoenix is experiencing a surge in multifamily development, with seven properties and 2,497 units under construction in the metro area at the moment.
Beyond that, another 49 properties with 15,164 units are on the way, according to Axiometrics. Rents for Class A multifamily units grew 10 percent in 2010 and another 6 percent last year, one area company told Multifamily Executive. As a result, several real estate firms in the metro area are trying to meet the level of demand that suggest, without overbuilding and creating too much supply.
Too much development could reduce the advantages rental property management companies and owners currently enjoy. At the same time, firms want to seize the opportunity demand is creating before it disappears. This pace of construction may be supported by recent strides in job growth, and the fact that development has been slow in the area recently.
One analyst noted that the focus seems to be strongly on top-tier units. If this trend goes too far, it could imbalance the market by oversupplying that group of renters while others are underserved in comparison.