PHOENIX-High-end apartments, more plush and luxurious than ever seen before in Phoenix are appearing on the market in select areas, with rents to match. In Central Phoenix, the Valley's most expensive rental area, effective rents average $1,062 compared to $818 throughout the rest of the Valley, according to a Q3 Marcus and Millichap apartment research report.

But will it hold? “We don't know because we haven't seen that tested yet. However I'll speculate we're going to be pretty successful,” says Jack Hannum, vice president of Transwestern.

Data so far is mixed. Q3 rents in the North Tempe/University submarket jumped 12% year-over-year to an average effective rent of $1,026, making it the Valley's second most expensive market, according to Marcus and Millichap. Central Phoenix rents were down 7% year-over-year, although the 5.9% vacancy rate ranked among the Valley's healthiest.

Hannum says for the most part, properties in lease-up are attracting the strong rents needed to justify the developments. “We'll have clarity in 18 to 24 months,” he tells GlobeSt.com.

New, over-the-top apartment amenities include lazy river rides designed to attract Tempe's college students, and temperature-controlled wine rooms and putting greens for the Camelback set. Location marks the ultimate amenity, with communities appearing within walking distance of shops and restaurants, university campuses and major employers.

At some of these locations, such as Central Phoenix's Broadstone on Camelback and North Scottsdale's Optima Camel View Village, rents pierce the $2 per square foot threshold.

That's unheard of in Phoenix where historically, the benchmark has hovered around $1.10 per square foot, says Alon Shnitzer, senior managing partner of ABI Multifamily.

“Phoenix historically has never had a true, true luxury product-especially an urban product,” Shnitzer says.

Valley properties built since 1990 are generally considered Class A. However, the new properties have reset expectations and almost fit into a new category, Hannum says. 

The trend toward high-dollar rents began in 2011, when West Sixth in downtown Tempe successfully transitioned a failed condominium project into high-rise apartments. “They leased up and they leased up very, very quickly,” Hannum says. “That was really the first time we'd ever seen anything like that in Phoenix.”

West Sixth's prices listed online range from $1,099 for a 465 square-foot studio to $8,316 for a four-bedroom, four-and-a-half bath penthouse suite. Amenities include a saltwater, infinity-edge pool and game room outfitted with poker and pool tables.

Although the property is located in the center of university activity, Hannum says nearly one-third of the residents were non-students. The project spurred developers' beliefs that the Phoenix market can absorb expensive rentals.

Luxury amenities are of course costly, but high land prices in prime areas are spurring much of the high asking rents. In February 2012, Alliance Residential bought the site on which its 259-unit Broadstone Waterfront will soon debut for $52,000 per unit.

The prime location near Scottsdale Fashion Square, restaurants and nightlife fetched top dollar compared to average land prices of $24,000 per unit among the other 7,000 units listed under construction in Transwestern's Q3 Phoenix multifamily report.

“Phoenix kind of wants to be LA so bad in its own way, and you feel it when you're hanging out in Old Town Scottsdale or North Scottsdale on the weekends,” Hannum says. “They definitely want lifestyle. So what are the developers bringing? They're bringing a lifestyle.”

The demographic for these ultra high-end units skews toward younger people without children or empty nesters, Hannum says. Out priced by homes in these prime areas, many renters are attracted to the location, deluxe amenities, and possibly to escape the hassle of homeownership. 

Looking ahead, the Valley's multifamily market is expected to remain strong as dropping vacancy rates push rents higher, the Marcus and Millichap report predicts.

Newer, modern apartments carry lower vacancies than older ones, giving added credence to the emerging luxury market. Vacancies for properties built after 1990 rest at 6% while those built after 1970 carry an 8.6% rate, according to the report.

Luxury apartments could soon appear in other parts of the Valley. An increasing number of high-paying technology jobs in the southeast Valley, driven by Intel and eBay, is driving demand, according to the report.