Prospective renters searching for an apartment in the Phoenix metropolitan area can look forward to a boost in new supply this year, enough to break the region’s five-year building peak.
New data released by RentCafe shows that Arizona’s capital is on a path to surpassing its five-year apartment construction record in 2022.
In a ranking of the top 20 U.S. metros by projected new apartments in 2022, the Phoenix metro came in sixth place with an estimated 15,988 new units, nearly double the number of rentals constructed in 2021. This total beats other major metro areas such as Seattle, Atlanta, and Washington, which are projected to complete between 15,341 and 12,176 apartments this year.
The New York metro expects to deliver the most rental apartments in 2022 with a total estimated 28,153 units — almost double the number of apartments completed across the city in 2021. For the first time since 2018, New York overthrew Dallas-Fort Worth from the top apartment-building position. The Texas metro is expected to complete 23,571 units this year, 10% less than it delivered in 2021.
“The construction industry is finally returning to pre-pandemic levels of activity but is still being hampered by three familiar challenges: labor shortages; material costs and availability; and supply chain issues,” said Doug Ressler, manager of business intelligence at Yardi Matrix, in the report.
The number of apartments projected to be built in metro Phoenix this year signals an upswing in the number of new rentals that have been finished in recent years. In 2021, the Valley of the Sun delivered 8,421 apartments, slightly more than what was produced in 2020 (8,092 units) and 2019 (8,248 apartments). During 2018, 7,655 new rentals were built in Phoenix, more than Orlando (7,587 units), Tampa (5,884 apartments), and Portland (5,586 rentals).
Among the cities that make up the Phoenix metro area, the City of Phoenix accounted for 5,009 of the 15,988 new rentals that will reach completion this year. In addition, Scottsdale, Gilbert, and Mesa are expected to bring between 1,866 to 1,769 units each in 2022, while Glendale, Tempe, and Goodyear will deliver in the range of 1,581 to 956 apartments in each city by year’s end.
The boom of new apartment construction in the U.S. is being fueled by demand for units across the country. This trend is being compounded by renters holding off on a home purchase due to rising interest rates and inflation, RentCafe stated.
On a national scale, RentCafe reports that a projected 420,000 new rental units will be completed in the U.S. during 2022 as multifamily construction hits a 50-year peak. The last time U.S apartment completions surpassed the 400,000-unit mark was in 1972.
As to why so many metros are expected to break records from the last five years, Ressler speculates that this is related to household formation as “people who lived with family or friends during the pandemic formed independent households as employment and savings surged."
