Phoenix Metro sees an increase in competition over apartment dealsMar 25, 2021
"Metro Phoenix already has recouped 85% of Covid-related job losses. A Colliers 2021 Global Investor Outlook Survey shows 98% of investors across all regions aim to expand their portfolios this year, with around 60% looking to expand by more than 10%." - Biznow
As commercial investing opportunities continue to flourish in today's market, out-of-state investors have started to take advantage of Phoenix's promising long-term economy. Millburn & Co, an investment firm based out of Salt Lake City, recently paid over $178 M for an 832-unit apartment complex in North Phoenix (Heritage at Deer Valley). The Phoenix Business Journal rates this as the highest sale price for any single multifamily community in the Valley's history.
Millburn stated that since 2015, this has been the investment firm's 9th acquisition—of its 7,500 units (valued at $1.5 B), 1,600 units are located in the Phoenix metro.
And that's not the only investment purchase in recent months. Canada-based, Oxford Properties Group is jumping into the mix, purchasing the Ten01 523-unit property for $146 M in Tempe. The investment group plans to increase its portfolio to 15,000 units in the next five years, citing that the Phoenix, Atlanta, Austin, and Dallas markets will be key.
"We have a very disciplined approach to our market selection process and Phoenix has been a market that has been on our radar for a while... The local economy is well-diversified and has a strong underpinning of growth-oriented industries."
"We believe Phoenix, driven by favorable demographic trends and healthy employment/income growth expectations, will be one of the stronger performing metro areas across the country," - Jeff Turkanis, U.S. Residential at Oxford
A third firm to make strides in the Valley is Los Angeles-based Tides Equities LLC. As part of their strategy, they've been doing a value-add on older apartment communities and re-branding them. In the last four years, they've paid out roughly $1.5 billion for 9,000 units.
"[We've] sold roughly 2,500 of those units totaling about $450 million. We're hoping to take down another few thousand units before the end of the second quarter for another $250 million to $500 million in the next four months. We definitely have a big appetite for new deals. It's getting really competitive and tougher to find new deals."
"The rent growth in Phoenix over the past few years has been phenomenal. We are hitting our year five projections after only two years of ownership." - Sea Kia, co-founder, Tides Equities