Rental Occupancy Hits 40 Year High in Metro Phoenix

By Brent Ruffner | Phoenix Independent

The Phoenix metro is at its highest occupancy percentage in more than 40 years, despite increasing rents around the region, according to a local housing research expert.

Thomas Brophy, national research director at Colliers in Phoenix, said the current occupancy rate is 97.1% — the highest since that number topped out at 96.8% in 1978, just before a construction boom in the early 1980s, he said.

“We are literally at the highest occupancy we’ve ever clocked,” Brophy said.

Since 2016, Brophy said multifamily developers have feverishly added 36,000 multifamily units — which includes leased properties and build-to-rent homes — to the Phoenix area. In that time, the occupancy percentage has increased by 230 basis points, he said.

By the end of 2021, Brophy said he estimates Valley developers will add another 11,000 multifamily units — the highest output since 2009, he said.

In 2009, 9,315 units were added to the area.

The housing research expert said developers weren’t prepared for a recent surge in people moving to the Valley and enough homes weren’t added in the past decade to accommodate massive population growth.

From 2010 to 2014, a meager 6,000 units were added to the region, he said.

“For a metro of this size, that’s basically nothing,” Brophy said.

He said not developing enough, coupled with a shift to a more renter-centric market were factors in how the current Phoenix market evolved to its current state.

From 2010 to 2020, there was a 6% increase in the amount of renter households in the Valley — something experts didn’t foresee.

“We weren’t anticipating them moving over,” Brophy said.

The increase in renters along with a lack of places to rent have seen an increase in living costs.

According to a Colliers Research Report, the yearover- year rent growth rate rose to 15% — to $1,413 — during the second quarter compared with the same quarter last year.

“This growth rate is nearly four times higher than the National average which increased 4.4%, but still $85 below the National average rent of $1,498,” the report said.

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Related: Colliers 2Q2021 Phoenix MSA Multifamily Review