Article by: SourceCafe
Phoenix Emerges as the Country’s Sixth Most Active Market for Real Estate Construction
A vibrant hub of economic growth, Phoenix has recently attracted a wave of investors, residents and businesses, triggering an intense surge in construction and urban expansion. The region’s favorable business climate, low taxes and proximity to California have positioned it as an ideal destination for companies seeking expansion or relocation, as well as for people searching for new professional opportunities or simply a warmer climate. As a result, corporate campuses, cutting-edge research facilities, mixed-use complexes and sprawling suburban developments have risen from the desert floor, transforming the economic fabric of the region.
Recent StorageCafe research ranks Phoenix sixth nationally for real estate development over the past decade (2013 to 2022). The research analyzed both residential construction (building permits issued for single-family homes and multifamily units) and commercial real estate (industrial, self-storage, office and retail space). Here’s how each sector fared over the past decade and how much real estate they actually built in the city.
Over 49K new apartments permitted in Phoenix over the past ten years
The residential construction sector in Phoenix experienced a productive decade due to the rapid population increase – the city is one of the country’s fastest-growing large cities. Not only the job opportunities but also the sunny, warm climate attract a very diverse population of newcomers, ranging from young professionals to families with children to retirees.
Due to the diversity of those moving to Phoenix (people and families at different stages of their lives, thus needing different types of housing), both the multifamily and the single-family sectors are thriving here. Phoenix enjoys vast swathes of available land to develop suburban-type communities, and the past decade saw over 32.3K single-family units permitted. The best year of the decade for single-family construction in Phoenix was 2021, issuing over 4,900 building permits.
Those who are more interested the amenities of apartment complexes are in luck in Phoenix as well, as the city saw plenty of new apartments over the past decade. The city registered over 49K building permits for multifamily units from 2013 to 2022 – and construction activity in this sector definitely picked up steam by the end of the decade. The city gave permits for over 10K apartments last year, which was the most active year of the decade in terms of apartment construction, followed by 2020 with almost 7K building permits and 2021 with 6.6K permits for multifamily units.
Self-storage in Phoenix is keeping pace with residential construction
The self-storage sector is closely connected to the evolution of the residential one, as both homeowners and renters use this type of service to solve some of their logistic problems. Anyone can use self-storage in a variety of situations, from streamlining the moving process and storing belongings while remodeling to the long-term storage of certain items, such as sports equipment, extra furniture, tools, out-of-season clothing or holiday decorations.
It’s only natural, thus, that the expansion of residential construction mirrors self-storage construction, and Phoenix is no exception. The city added an impressive 4.35M square feet of new space to the local inventory over the past decade with 2020 — delivering over 850K square feet of new self-storage space — being the most active year. Currently, a 10’x10’ self-storage unit in Phoenix rents for $125 per month.
Phoenix boasts the country’s fourth most active industrial construction sector
Strategically located in the southwestern United States, Phoenix is an ideal distribution and logistics hub. Its proximity to major transportation networks, including highways, railroads and an international airport, provides easy access to regional and national markets. The city’s favorable location attracts companies involved in manufacturing, warehousing and distribution, driving the need for industrial facilities. And Phoenix developed plenty of industrial space over the past decade — almost 30M square feet of space — landing Phoenix fourth nationally for this indicator, surpassed only by Houston, Fort Worth and Dallas. Industrial space construction peaked in 2019, with 4.6M square feet of new space in the local inventory. Phoenix also added almost 4.3M square feet of office space and 2.6M square feet of retail space from 2013 to 2022.
With a focus on meeting the demands of a growing population, providing employment opportunities and capitalizing on its favorable geographical position, Phoenix has emerged as a vibrant and dynamic real estate market, marking a transformative period of construction activity over the past decade. Striking a balance between growth and environmental stewardship has become a priority going forward as stakeholders navigate the complexities of a rapidly evolving urban landscape.