The Hotbed of Apartment Activity in Tucson

While Phoenix is getting all of the headlines, other Arizona markets are also seeing population growth and strong apartment demand. Tucson is among the hot markets in Arizona, experiencing population and job growth. As a result, the market is also seeing strong apartment demand and increasing investment activity.

“Multifamily demand in Tucson has been very strong, which has created increased occupancy levels across the market,” Jeff Casper at CBRE multifamily, tells GlobeSt.com. “Tucson’s expanding employment base, specifically in technology and engineering jobs, has helped drive the robust demand for multifamily housing. Additionally, multifamily owners have been investing in the properties to create quality options for area residents.”

In fact, Tucson is comparable to Phoenix in terms of market growth. “Phoenix and Tucson were two of the top markets in the country for rent growth in 2019,” Asher Gunter, a broker at CBRE multifamily, says.  “Both metros are seeing diversified job growth, population growth and heavy in-migration from other states due to their quality of life and relative affordability.”

Gunter and Casper recently sold Silverbell Springs, a 290-unit apartment property in Tucson, for $50.25 million. A joint venture between The Bascom Group and funds managed by Oaktree Capital Management, purchased the property in a deal that is indicative of the kind of investor demand that Tucson is seeing. “These two recent transactions are examples of the attention Tucson is now getting from more investors around the country,” says Gunter. “Both assets generated deep levels of interest from the investment community, and both buyers were new to the market.  Investors that have not owned in Tucson are recognizing the area’s healthy multifamily fundamentals. The Tucson market did not bounce back as quickly as other markets in the West, and there is still a long runway for growth.”

This year, apartment demand should continue to grow, particularly in terms of investor interest. “We anticipate transaction volume to continue to climb and continued investor interest, particularly from new capital sources that are diversifying from other markets in the Western U.S,” says Gunter.