The study, commissioned by Encino, CA-based Marcus & Millichap Real Estate Investment Brokerage Co., found that while 26,500 new jobs are expected to be created and vacancy rates are projected to decline by 9.5% during 2003, the Valley's average apartment rental rate is facing a 2% decline. "We still have a lot of concessions to burn off," David Wetta, senior vice president and regional manager of the firm's local office, tells GlobeSt.com, referring to the incentives that building owners handed out to attract tenants.
Low mortgage rates and an abundance of housing will put pressure on building owners to drop rents slightly, with some submarkets, including Mesa and Gilbert, posting rents below the Valley's average of $694 per month. In North Scottsdale, however, owners will continue to command asking rents that are 30% above the metro average due to the area's low vacancy rate and high home prices.
But, Wetta says, there is some good news on the horizon. A slowdown in the delivery of new units which dropped from 6,300 in 2002 to 4,700 just a year later, will help ease the Valley's high vacancy numbers and turn rental rates around. The picture for investors also remains optimistic with sales transactions during the first half of 2003 holding steady with 2002 levels, the study showed.
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