Metro Phoenix’s construction sector still is bruised from the beating it took during the Great Recession.
But while recovery has been slow – especially in home building, where a year-over-year decline in new home permits is expected this year – the apartment and office markets have been bright spots.
The trend was noted by Elliott Pollack, economist and CEO of Scottsdale-based Elliott D. Pollack & Co. during his presentation at last week’s Annual Economic Forecast Luncheon sponsored by Arizona State University’s W.P. Carey School of Business.
So far this year, through the third quarter, more than 4,600 apartment units have been built Valleywide, according to data Pollack obtained from brokerage CBRE Inc.
That’s more than four times the number of units built just two years prior, and Pollack expects the figure could jump another 40 percent next year, or to about 6,500 units. That, however, still is fewer than the 9,092 units built in 2001, the peak number within the past 15 years.
This apartment boom isn’t too surprising. The rental market was one of the few sectors of the economy that benefited from the housing crash, and Pollack said it could be a while before homeownership rates climb back to normal.
Office construction has also seen a boost this past year.
There’s almost 2.8 million square feet of office space currently underway, which is 13 times the amount of space completed last year. Next year, developers have plans for as much as 6.8 million square feet.
The boost in office construction, however, may seem somewhat surprising.
Both the local job market and population growth have been slow, and metro Phoenix has one of the worst office vacancy rates in the nation at about 20 percent.
However, much of that vacancy is in smaller spaces, which means office availability for bigger companies is scarce, and hence why most of the new buildings underway are large.
