Where have all the tenants gone? Vacancy Rates in Greater Phoenix

By sonoran • October 2nd, 2008

The Phoenix Business Journal (9/26/08) has an overview of the apartment building vacancy rates.  I’ll add my thoughts to this relating to smaller multifamily buildings.


Reasonably when the market for homes goes down in sales and demand there is increased demand for rentals, both homes and apartments, "We were initially surprised to discover that what was bad for single family housing was not good for multifamily housing either."

 

"Hendricks’ researchers estimate that there are 8,500 private homes, including condos, listed for rent in the Valley. There are an estimated 22,000 empty apartments as well."


Take a look at our data for demand and supply of single family rent homes.  This includes months of supply and the median sales price for comparison.

It’s quite clear by all the for rent signs both broker and private, that many home owners and investors are trying to lease out properties.  Often this is because it’s because they cannot sell or it’s not the right time to sell. The surge in single family home rentals has a shadow effect on all rental, home and apartments.


"Experts in the multifamily market believe some people are so pressed financially that they are moving in with friends and family members."


We have noticed this trend directly with out own properties and the properties that we manage both single family homes and multi-family apartments: it’s either friends moving in together or a mother moving in with her son and so on.  Often this is a consolidation of two apartments into one or two homes into one.  I’ve seen cased where a home owner moves in with family and rents out their primary home to help during this economic change. 


"Vacancy rates on average are creeping up to 12 percent.  That’s more than double the 5 percent vacancy rate that is considered healthy for a metro market.", "…vacancies in west Phoenix stand at 13.2 percent.


So both physical and economic vacancy is higher because besides having less units occupied many of the complexes large and small are offering incentives to move in.  Smaller properties tend to do better if they are properly managed.  The central Phoenix areas and east Phoenix tend to have lower vacancy rates due to the central location, while apartments in less desirable areas, even in certain pockets in central phoenix, tend to do worse.  Despite the central location it’s everywhere that owners need to put in more work or more advertising to keep units rented.

 

Vacancy rates are:


  • Average for the valley  12%
  • West Phoenix  13.2%
  • Scottsdale 9.1%
  • Paradise Valley 9.9%
  • Ahwatukee 8.4%
  • Chandler 8.7%

 

Comments(2) Investment News, Multifamily Market, Rental Trends

Comments

By tom ooldham on August 14th, 2009 at 12:49

is this information still roughly accurate in aug 2009?

By Artur Ciesielski on August 14th, 2009 at 18:08

@tom,

Roughly yes, but the situation has improved. Physical vacancy is down, but only because prices have been adjusted to compete better with single family homes plus the pool of renters has increased.

 

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