Blackstone Real Estate Income Trust has acquired six apartment complexes in the Phoenix area for $311 million.
The sellers were DRA Advisors and Milestone Group.
The portfolio consists of 1,751 units spread across Surprise to Chandler. The complexes include Stadium Village in Surprise, Finisterra in Tempe, Sierra Foothills in Phoenix, Lumiere in Chandler, Sierra Canyon in Glendale and Waterford at Peoria.
According to a Business Real Estate Weekly of Arizona report, DRA Advisors and Milestone Group purchased the six properties in 2002 for $179.25 million.
Over the past year and a half, BREIT has invested $649 million to purchase 3,751 apartments in 12 Valley assets. The company also owns 192 multifamily units in Flagstaff.
As of the first quarter 2018, Blackstone owned 73,000 apartments, 34 million square feet of retail buildings, 136,000 hotel rooms and 66 million square feet of industrial space located across the United States.
Phoenix’s economy is moving beyond its traditional reliance on single-family construction and retirees, according to a Fannie Mae report, Multifamily Metro Outlook: Phoenix Winter 2018. It has become a magnet for the relocation of financial, professional services, and manufacturing firms. As a result, the surge of new residents is providing a boost to jobs in the retail, hospitality, construction and healthcare sectors. This trend is likely to continue for the next couple of years. Moody’s Analytics estimates healthy job growth of 2.4 percent, resulting in just under 100,000 jobs added through year-end 2019.
The cost of doing business in Phoenix is slightly lower than the national average, which should continue to attract businesses relocating from high-cost California. The well-paying, high-tech sector here — dubbed the Silicon Desert — now accounts for about 5.4 percent of employment, well above the national average of 4.8 percent. Intel is investing $7 billion to complete the Fab42 microprocessor plant in Chandler and will hire 3,000 employees. Meanwhile, the West Valley is home to mid-wage jobs in distribution for e-commerce, and UPS is building a new facility that will create an estimated 1,500 jobs.
Continued solid economic growth is reflected in the multifamily market. The average vacancy rate remains low by historical standards at an estimated 5.5 percent as of third quarter 2017, and concessions of 0.8 percent of asking rents are well below the 6.2 percent long-term average.
Phoenix has also maintained its excellent demographic profile. The metro’s population of 4.7 million is projected to increase 2.3 percent per year on average annually through 2021, amounting to more than 100,000 people per year, nearly triple the national rate. This population growth should provide stable ongoing demand for housing. Also, millennials are about 21 percent of the population, and that group is expected to grow locally at five times the national rate.
Even so, although the economy has transitioned to now include higher-paying sectors, tourism is the fifth-largest sector by employment at 11 percent and has a below-average annual income of just $28,000. Also, while the construction sector represents about 5.5 percent of employment and provides better-paying jobs, it is often volatile and can result in sudden layoffs.