PHOENIX—There are renters that would like to buy homes, but can't because of the barriers there. There is also a new group of renters by choice. Those thoughts are from Melanie Morrison, principal of MEB Management Services, who recently spoke about multifamily demand at RealShare Phoenix Metro.
Morrison explains that there is a much higher percentage of renter who is an empty nester in Phoenix. "After the recession, people's mindset changed a bit about mortgages. They don't want to be tied down by a mortgage."
She added that "We have empty nesters, retirees, young professionals who need the ability to move if their job changes and young professionals. I also think we still have some pent up demand from Millennials living at home."
As of now, moderator John Kobierowski, senior managing partner of ABI Multifamily, said that 100% of the multifamily development he sees is spec development. "And we are filling it," he said. "We are leasing up so quickly that construction can't keep up with it."
Brandon Harrington, SVP of Walker & Dunlop, explains that 40% of the units in the Phoenix Metro area are 1980s built. "The amount of units we are bringing today is relatively conservative. We are looking closely at the absorption schedule."
When Walker & Dunlop does a loan, Harrington said that they have to make sure it will absorb. "What we have looked at in Phoenix compared to other markets is that the absorption and demand have been very strong."
He adds that Phoenix is definitely a value. "There is relative value for Millennials moving to phoenix. We have seen a total transition from people wanting to buy a house in the southeast valley to people wanting to be in core locations. That is what is really pushing a lot of this development. You can buy a class c apartment complex for $130,000 in Denver or you can buy a class A product in Phoenix in the high $100,000s depending on where you are at, so there is relative value in this market place."
Check out the following articles for more from the RealShare Phoenix Metro event.
Phoenix Is its Own Worst Critic
Phoenix To Thrive on Multi-Tenant Industrial
Can't Wait for Build-to-Suits in Phoenix
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