PHOENIX, AZ - Apartment vacancies in the Valley grew in the first quarter of 2008, even as record numbers of homeowners were losing their houses to foreclosure. Where people are moving is somewhat mysterious, given the results of a report released Wednesday by apartment consulting firm Hendricks & Partners. Apartment vacancies were 10.3 percent for the first three months of the year, according to the Hendricks report. The rate was 8.3 percent for first-quarter 2007. Job losses might be to blame, the report stated, citing cuts in the financial and construction industries.
Other details included in the Hendricks research: New apartment construction was up during the first quarter, with 1,334 new units available to renters. Building permits were down by more than 60 percent from last year, with 1,372 permits taken out in the first quarter. Rent growth was the lowest in four years, with a rent increase of just 1.2 percent. Vacancy rates were highest in the west Phoenix (13.2 percent) and Mesa (12.5 percent) submarkets. Vacancy rates were lowest in Chandler (7.5 percent). Average rents decreased most in North Scottsdale, with a decline of nearly 2 percentage points. Average rents jumped the most in Gilbert, with a 4-point hike.
The multifamily investment market also looked gloomy, according to the Hendricks report. "Only 11 properties of 100 or more units were sold in the first quarter of 2008, a decline of more than 69 percent from a year earlier," the report stated. "Values for some properties have fallen by as much as 20 percent and might drop further this year, depending on how quickly the investment market recovers."
Source: Phoenix Business Journal