Vacancy rates continue to decrease and rental rates are increasing. Total sales were down slightly from past quarters due to shortage of inventory both from distressed assets and reasonably priced communities. Buying pressure remains strong – with California starting to get back into our market. New apartment construction has significantly ramped up with 3,973 units currently under construction and 22,272 in various stages from initial requests to permit and zoning-ready.
KASTEN LONG COMMERCIAL GROUP: In early April, the Scottsdale Area Association of Realtors held its 1st Annual Commercial Summit with more than 250 attendees. Jim Kasten was the chairman for the event and KLCG participated as a sponsor.
KLCG had 22 transactions in the Q1 including five apartment sales and 17 commercial sales and leases.
Data Change: Since 1998, we have been reporting multifamily data provided from ASU’s Phoenix Metropolitan Housing Study. With ASU’s elimination of this study, we will now report data for properties with 50 or more units from RealData, Inc. Within this size range, there are 1,262 properties with a total of 260,000 units.
Vacancy Rates Decrease to 7.7%
Vacancy rates for the 1st quarter for stabilized 50+ multifamily properties decreased from 8.3% in the 4th quarter to 7.7%. Double digit vacancy rates were reported in N. Central Phoenix and an area roughly west of I-17 from Baseline to Peoria Avenues. Vacancy rates of less than 6% were reported in Scottsdale, Tempe, Gilbert and Chandler. A detailed list showing all vacancy rates by sub-district is posted on our web site www.KLCommercialGroup.com.
New Construction and Permitting
After several years of minimal apartment permitting or new construction, there are now 21 new apartment communities under construction consisting of 3,973 units. The majority of these are the 8 projects in Phoenix (1,358u), 4 in Tempe (982u) and 3 in Scottsdale (802u). In addition, there are another 92 projects currently in various stages of the permitting and rezoning process consisting of 22,282 units. The majority of these are 24 projects in Phoenix (6,482u), 22 in Scottsdale (5,886u) and 12 in Chandler (2,945u). A number of these will likely not be approved, but many will. Unless the demand for apartments increases, the added supply will start putting pressure on rental rates and overall occupancy.