Increased Activity and Price Discovery in Phoenix Multifamily

October 22, 2024

The Federal Reserve rate decrease of 50 basis points in September has garnered plenty of attention and the drop in interest rates has also impacted commercial properties—specifically multifamily buyers, including both institutional and private investors. In the past few weeks, the Phoenix multifamily market has seen a high volume of buyers interested in acquiring properties, deals going into escrow, and completed investment transactions. Is this a result of interest rates, buyers getting excited about having investment opportunities in one of the nation’s hottest multifamily markets, or a combination of factors?

All investment asset classes are particularly sensitive to interest rates, and market observers are optimistic that the rate cut relief will encourage CRE dealmaking. Multi-family assets are particularly attractive to investments as an investor has the ability to spread its risk through multiple tenants/revenue pockets. According to a recent study from Altus Group, the Phoenix metro area ranks #1 in expected above-benchmark returns among the country’s comparatively bullish multifamily markets in the Sun Belt, citing positive population growth and household income growth.

Notable Recent Multifamily Sales in Phoenix

What has price discovery looked like in the Phoenix multifamily market? Recent sales have included:

Villas De Azul in Phoenix, a 301-unit property that sold for $33 million in September 2020 and sold for $30.1 million earlier this month—an 8.8% decrease in almost exactly four years.
Escondido Apartments on N. 36th St. in the Arcadia area of Phoenix. The 75-unit property sold for just over $20 million in March 2022 and changed hands for $16 million at the end of August—a 20.2% drop.
The Hera on 3213 E Flower St, Phoenix, 20 units, which sold in May 2024 for $10.45 million after selling for $15 million in June 2023—a 30.33% decrease.
IMT North Scottsdale, 15509 N Scottsdale Rd, Scottsdale, 240 units: Sold in May 2022 for $145 million and March 2024 for $96 million—a 33.79% decrease.
Fiesta Sun Apartments, a 45-unit property on 8639 N 7th St, Phoenix, which sold in October 2021 for $5.85 million and December 2023 for $4.73 million—a 19.15% drop.
SkyWater at Tempe Town Lake, 601 W Rio Salado, Tempe. This 328-unit property fell from $160 million in July 2022 to $112 million in January 2024—30.00% decrease.