Commercial Brokers Bullish On Class-C Rent Growth
The Brokers Forum Report published by The Center for Real Estate Theory and Practice at ASU's W.P. Carey School of Business has some interesting tidbits about the valley's multifamily sector.
Highlights of the report:
Multifamily is coming back to the West Valley
Class-A product in Scottsdale, Tempe, and downtown Phoenix will face some pressure
Class-B is seeing a valuation upswing on the back of value-add opportunities
Most "heavy-lifting" value-add opportunities seem to have been exhausted
Class-C product is witnessing strong interest because of the lack of affordable housing
Almost a quarter of all brokers surveyed expect vacancies to rise - primarily due to increased Class-A supply
Only 11% of brokers expect Class-B and Class-C vacancies to rise
Only about a third of all brokers expect Class-A rents to increase compared to complete unanimity on the that Class-C rents will rise
A little more than half of all brokers believe affordable housing will be a concern in the valley
Overall, the brokers surveyed remain very bullish on the apartment sector barring some concerns about over concentration of Class-A product in the more popular neighborhoods of South Scottsdale, Tempe, and downtown Phoenix. Class-C will emerge as a strong sub-sector as rents rise and affordable housing becomes a pressing issue for the vast majority of low-moderate income tenants.
The entire report can be found here.
