Phoenix, Arizona
Phoenix is located at the heart of one of the most rapidly expanding and economically vibrant metro areas in the United States. It remains the 11th largest metropolitan area by population, experiencing substantial growth over the past decade. As of 2024, the metro area is home to over 5 million residents, having gained nearly 700,000 new inhabitants since 2010, driven by ongoing in-migration from other states, especially California. This growth shows no sign of slowing, as Phoenix continues to attract residents due to its affordable cost of living, strong job market, and desirable climate.
Economic Hub and Tech Boom
Phoenix has cemented itself as Arizona’s economic center and one of the key players in the national economy. The region’s tech sector has seen explosive growth, with several Fortune 500 and Fortune 1000 companies maintaining their headquarters in the area, such as Avnet, Republic Services, and Sprouts Farmers Market. Additionally, companies like Intel, Amazon, and TSMC are investing billions in expanding their local operations. Intel, for example, continues its $20 billion expansion in Chandler, creating thousands of high-paying jobs. This influx of tech companies has made Phoenix a leading city for tech job growth.
Phoenix’s rise as a tech and financial hub has also been recognized on a national level. The city ranks among the top 10 metro areas for attracting tech talent, according to recent reports by CompTIA, and boasts the third-largest labor pool in the Western United States. Banner Health, American Express, and Boeing are also among the key employers driving the local economy.
Population Growth and Rental Demand
The Phoenix metro area remains a magnet for new residents, a fact that underpins the strong demand for rental housing. A study from the National Multifamily Housing Council and National Apartment Association indicates that Phoenix will need an additional 165,000 apartments by 2035 to accommodate its rapidly growing population. This demand surge will continue to fuel interest in multifamily properties as a sound investment.
Phoenix, Arizona
Phoenix is located in the heart of the fastest growing and most dynamic metro area in the country. It is the 11th largest Metropolitan Area in the nation by population. It is also one of the fastest growing major metro areas, gaining nearly 600,000 residents from 2010 to 2017, and more than 1.4 million since 2000.
The Phoenix metro area has historically been the center of the state’s economy. A thriving job market is the driving force behind the city’s renaissance, with high-income positions being created in the metro area. Money Magazine named Phoenix No. 3 among the country’s hottest cities for tech jobs in 2017, and Intel has announced that it intends to invest $7 billion in suburban Chandler, creating 3,000 new jobs where it already employs 11,300 people. Several Fortune 500 and Fortune 1000 companies have their international headquarters in the area, including Avnet, PetSmart, Apollo Education Group, Republic Services, ON Semiconductor, and Sprouts Farmers Market. Other Fortune 500 companies with significant presence include Banner Health, American Airlines, American Express, Wells Fargo, Boeing, and Intel.
Rental demand is being aided by strong population growth in the Phoenix metro area. A study by the National Multifamily Housing Council and National Apartment Association found that the area will need 150,302 new apartments by 2030. That is a 38% increase over the current number.
Multifamily 2024 Outlook
EMPLOYMENT (60,000+ NEW JOBS EXPECTED)
Despite nationwide economic challenges, Phoenix has maintained a resilient labor market, outperforming many other major metro areas. Employment is expected to continue growing, with projections of over 60,000 new jobs added in 2024, driven by the booming tech, finance, and healthcare sectors. This rapid job growth will further attract both young professionals and families to the region, bolstering rental demand.
VACANCY RATE (3.2% DECREASE)
Thanks to sustained population growth and strong rental demand, the vacancy rate in Phoenix is projected to decline to an impressive 3.2% by the end of 2024. Despite ongoing construction, the demand for rental housing continues to outpace supply, ensuring low vacancy rates across the metro area.
RENT GROWTH (PROJECTED 6.8% INCREASE)
Average rents in Phoenix have been rising steadily and are expected to increase by another 6.8% in 2024. As new, high-end apartments are completed, average asking rents are forecast to surpass $1,450 per month. Phoenix’s rent growth continues to exceed national averages, positioning it as one of the most attractive markets for multifamily investors.
Migration and Economic Momentum
Phoenix continues to benefit from robust migration patterns, both from within the U.S. and internationally. U-Haul ranked Arizona as one of the top states for inbound migration, with Phoenix consistently seeing net in-migration of over 85,000 new residents annually. This influx, driven by the city’s affordable housing, strong job market, and favorable business environment, will continue to fuel demand for multifamily housing in both urban centers and suburban areas.
New Construction Pipeline
While the Phoenix area has seen a surge in new apartment developments, with completions expected in key areas like downtown Phoenix, Scottsdale, and Chandler, demand continues to exceed supply. The ongoing construction boom in the multifamily sector is set to deliver over 25,000 new units over the next two years, but this will still fall short of the population-driven demand. This imbalance is expected to keep vacancy rates low and rent growth high.
Multifamily 2021 Outlook
EMPLOYMENT (50,000 JOBS)
Phoenix employers better weathered the impact of the health crisis than the U.S. overall, which will aid hiring this year. The employment base should climb to within 1 percent of the pre-pandemic level by year end.
VACANCY (3.5 % DECREASE )
While overall renter demand in 2021 is expected to exceed last year's level, historically high construction will temper the decline in the vacancy rate to a value of 3.5 percent, which is a new multidecade low.
RENT ( 7.2% INCREMENT )
The combination of falling vacancy and new, high-priced units coming online will push the average asking rent up to $1,338 per month in 2021. The annual growth rate is generally in line with the trailing five-year average.
The metro’s economic outlook for 2021 is bolstered by a resilient labor market and positive migration patterns. According to U-Haul, Arizona ranked fifth in the nation in destination one-way truck rentals last year. The Phoenix metro area specifically recorded the estimated net in-migration of over 75,000 residents, the second highest total in 14 years. These demographic tailwinds will continue to fuel record-low apartment vacancy in 2021 and nationally leading effective rent growth.
Strong long-term population growth has prompted a record level of apartment openings slated for this year. The pipeline of new inventory will be insufficient in meeting demand in 2021, however. Residents seeking relatively affordable accommodations will continue to gravitate to Phoenix. Numerous completions in the central metro area, as well as the surrounding cities of Gilbert, Scottsdale, Goodyear and Peoria, will attract new residents and prospective employees of firms that are establishing facilities in these areas.
Key Highlights of Phoenix MSA:
- Highest rent growth in the nation
- Population, job, and rental rate growth all outpacing national averages
- Ranked 3rd in U.S. for high-tech job growth and 3rd largest labor pool in the West
- Maricopa County continues to be the fastest-growing county in the U.S. for the 5th consecutive year
- 18% employment growth and 80% wage growth projected over the next decade
Phoenix remains a robust and dynamic market, with strong fundamentals and a bright outlook for multifamily investments. Its combination of rapid population growth, a thriving job market, and rental demand makes it one of the most promising cities for long-term investment in multifamily housing.
- Highest rent growth in the Nation
- Population, job and rental rate growth all outpacing national average
- Ranked 3rd in U.S. for high-tech job growth and 3rd largest labor pool in the West
- Top 10 fastest growing economies and 4th fastest growing Metro
- Maricopa County is the fastest growing US County for the 4th straight year
- 17% employment growth and 76% wage growth projected over the next decade