Investment Activity Flows Back into the Desert Southwest/Rocky Mountain Region

The desert Southwest/Rocky Mountain apartment markets have seen a ton of new investment interest in recent quarters. To be fair, however, this region was slowly rebuilding its investment legitimacy through the back half of the 2010s decade after being hammered during the Great Recession. One of the (many) things driving investment into this region this past year is excellent market performance. Many of the markets in this pocket of the country (including Boise, Phoenix, Salt Lake City and Tucson) have been top-performing rent growth markets with incredibly tight occupancy rates. The work-from-anywhere trend has clearly been a crucial component of growth in these states. Arizona, Idaho and Utah have been some of the fastest-growing states the past two years when looking at percent increase. They’re areas that are far more affordable than their neighboring metro peers (Seattle rents compared to Boise or LA rents to Phoenix, for instance) which has generated some renter demand, no question. But it’s fair to mention these markets have the ability to generate non-migratory demand through local economies. Boise and Salt Lake City were among the first markets to get employment levels back to the pre-pandemic mark. That, favorable population/migration trends, and (at least up until the past year or so) less of a competitive acquisitions environment than neighboring west coast peers helped push investment interest up in a big way throughout 2021. Going forward the question for this region is: can demand keep pace with supply, and will performance levels justify investment volumes? Early indicators say yes, but it should go without saying that due diligence is prudent when making these types of investment decisions.