10-11-2013 10:46 PM

Vacancies up, rents down as apartment construction surges




Wood Partners’ $38 million luxury apartment project slated for downtown Scottsdale will add to the glut of new multifamily projects going up across metro Phoenix, especially in Scottsdale.
Apartment development has been surging this year as developers aim to get ahead of demand for rentals, a trend that’s symptomatic of the recent housing crisis, which turned many homeowners into renters.
But with this increase in supply, Valley apartment vacancies are starting to flatten out -- and even increase in some markets, such as south Scottsdale -- and the uptick in rental rates is slowing, according to Hendricks Berkadia’s third-quarter multifamily report.
Construction has wrapped up on more than 1,500 multifamily units so far this year, and about one-third of those were completed during the third quarter, the report said. The bulk of these new deliveries are taking place in Scottsdale, Chandler and Gilbert. By the end of next year, Hendricks Berkadia estimates more than 5,400 units will be finished Valleywide.
Builders pulled permits for roughly 1,200 multifamily units during the third quarter — a 67.7 percent spike over last year — and about 67 apartment projects were in some stage of planning Valleywide, the report said.
This supply surge caused the Valleywide apartment vacancy rate to increase slightly, from 6.3 percent at the end of June to 6.8 percent by the end of September. The overall third-quarter vacancy rate, however, was still lower than a year ago, when it was 7.1 percent, the report said.
Vacancies for luxury apartments, such as the one Wood Partners is building, saw the biggest quarter-over-quarter jump: 80 basis points, from 6.5 percent to 7.3 percent, the report said.

  • Page 1
  • 2

|View All
Kristena Hansen covers residential and commercial real estate.


Continue Reading >>