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Inbound migration, commercial real estate rent growth in Phoenix to continue, report says

Downtown Phoenix
Posted at 8:40 AM, Jul 12, 2022
and last updated 2022-07-12 11:40:11-04

PHOENIX — A growing population has brought a higher cost of living in Phoenix. And that growth trend is showing little sign of slowing down, with a new report suggesting that as the population swells, the Phoenix metro could draw more interest from out-of-state companies looking to set up shop in the Valley as well.

A study from New York-based Moody's Analytics found that an inbound trend of people moving to Phoenix and across the state is expected to continue. Moody's Thomas LaSalvia, who authored the report, said that, historically, the big draw to the Valley was its affordability. However, LaSalvia found that Phoenix's rent-to-income ratio is up 7% from the start of the Covid-19 pandemic to nearly 27% as of Q1 2022.

"That corresponds to the 30-plus percent rent gains that we've seen in Phoenix over the last couple of years in aggregate," LaSalvia said. "One of the concerns is not only a deceleration in prices for housing but maybe a slight correction in the 5-10% range. That's very possible if demand dries up enough."

LaSalvia said the influx of people to the Valley will bring new skills to the local workforce, drawing the attention of out-of-state companies who want to be part of Phoenix. More companies and jobs in the area would prompt more construction, a larger supply of homes and increased incomes.

Read more of this story from the Business Journal.