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CoStar Market Insights: Multifamily Developers Branching Out in Phoenix

West Valley and North Phoenix Are Becoming Hot Spots for Development
April 6, 2018
Pictured: Avalon.

More cranes are in the air in Phoenix right now than at any other point in this cycle.

Many of those cranes are for multifamily projects - slightly more than 20,000 units were under construction at the end of Q1 2018, and about 10,000 of those units are expected to deliver this year. For most of this cycle, construction has been concentrated in the East Valley, Scottsdale and Downtown Phoenix. But developers have started to branch out to previously overlooked areas.

Development has noticeably picked up in the West Valley and North Phoenix, where fundamentals have long been tight due to strong demand and limited new supply. Generally, these areas of Phoenix have an abundance of Class B and C product, while Class A apartments command a significant premium.

Currently, more than 3,100 units are under construction in the West Valley and North Phoenix, nearly all of which fall under the Class A designation. In contrast, only 2,800 new units have delivered in these areas since 2010.

One of the biggest projects in the pipeline is the 4-Star, 400-unit Avalon by Lervick LLC. The West Valley apartment community is being built on a former movie studio site in Avondale. It will consist of 72 one-bedroom units, 296 two-bedrooms and 32 three-bedrooms.

Avalon broke ground in Q4 2017, and is slated to deliver its first phase by year-end. The median household income within a one-mile radius is $63,595, which is about 13 percent higher than the city of Avondale’s median household income.

A joint venture between Investment Property Associates and Rockefeller Group is developing its fifth and sixth multifamily assets in Metro Phoenix. But for the first time, its projects will not be in the East Valley or Scottsdale.

In North Phoenix, the venture is developing the 4-Star, 385-unit LIV North Valley, which broke ground in Q2 2017 and is expected to deliver its first units by this summer. The median household income within a three-mile radius of the property is $84,472.

The development partnership also has a project underway in the West Valley in the form of the 4-Star, 326-unit LIV Goodyear, which is estimated to deliver by the end of the year. Goodyear has been one of the fastest-growing cities in the metro since 2010, with the population rising by more than 26 percent in that time.

CoStar Market Insights provides a snapshot of recent real estate trends. The CoStar Market Analytics team monitors commercial and multifamily real estate across 390 metro areas, with a granular understanding of the projects, players and economic trends that move these markets.

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