Unlocking Phoenix’s Housing Potential: Existing Vacant Land Could Hold Apartments for 93,000 Renters

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Phoenix is one the nation’s fastest-growing cities, having welcomed more than 30,000 newcomers in the last three years, all needing a place to live amidst an affordable housing shortage. According to Maricopa Associations of Governments data, almost half of renters in Maricopa County are cost-burdened, paying more than 30% of their income on rent. As a result, since 2017, homelessness in Phoenix surged by more than 70% to an alarming 9,600 people at the start of the year.

More action is needed because Phoenix holds the key to its own housing crisis. The city ranked third nationally for undeveloped land, right behind Dallas and Fort Worth. When checking the housing potential in Phoenix, apartments built on this empty land could house a whopping 93,000 renters, triple the number of new residents that the city welcomed in the last three years.

Housing shortages are common in many big cities, not just Phoenix. This is the second article in a new RentCafe series that will explore vacant land and housing potential in other places across the country. Our first piece focused on Dallas.

Precisely, the city of Phoenix has a staggering 36 million square feet of available land that is already zoned for multifamily, or 363 plots. All of this space represents the housing potential in Phoenix, and it could be turned into residential communities with up to 32,500 apartments. That’s nearly 70% of all the apartments built in Phoenix since the turn of the century.

By using the 363 unused plots that are already zoned for multifamily to create homes, the city could directly answer the needs of Phoenicians who have to deal with rising rents. Less than 10% of rents are below $1,000 in Phoenix, compared to more than 90% in 2010. Plus, the city’s population is expected to exceed 2 million by 2040, leading to increased housing demand.

To get a clear view of the areas with the most potential for building more apartments, we used data from sister company PropertyShark to inspect vacant lots. Then we looked at zoning restrictions across Phoenix and uncovered the top zip codes that could house the most rental units.

Stepping up development of rentals would also temper rent increases. More precisely, building 3,250 new apartments per year would slow down rent growth in the next 10 years from an estimated 88% with the current pace of construction and growing migration trends to 77% in the best-case scenario.

In the context of the new development restrictions due to Arizona’s evaporating water supply, it’s even more important for developers to tap into the great housing potential in Phoenix. A slowdown in apartment construction to 1,000 units per year would lead to rents doubling in the next 10 years. For further information and a detailed breakdown of our forecast, please refer to the section below.

Recently, the second fastest growing city in the country started working on several initiatives to allow for more housing density, create and preserve affordable apartments and index all vacant properties as a first step in making sure they are used efficiently and not abandoned for years to come.

For now, let’s explore Phoenix’s most promising areas for apartment construction.

Top 5 zip codes for housing potential could house 65,000 renters

The first five zip codes on our list could hold more than 70% of the total number of apartments that could be built on Phoenix’s vacant parcels, which is enough for nearly 65,000 renters. If we take a look at the map more closely, these areas form a corridor to the north and south of the city core, right across downtown.

Zip code 85003 is Phoenix’s most promising area in terms of housing potential. The vertical strip running across downtown, up through Midtown and down through Central City could accommodate close to 6,700 apartments on its 19 vacant parcels — more than 19,000 renters could call these apartments home. Actually, zip code 85003 is already one of the city’s most active areas for apartment construction, with more than 2,000 units completed in the last decade.

Next comes zip code 85050, up north, with room for 16,500 renters and roughly 5,800 units that could be built on the eight vacant parcels already zoned for multifamily. Covering parts of Desert Ridge, Tatum Highlands, Northgate Village and Aviano, the empty plots here cover 10.4 million square feet, the third vastest vacant area after those in zip codes 85085 (#8) and 85041 (#6).

Ranking third is zip code 85004, spanning several upscale, central neighborhoods from Salt River up to Midtown, and through downtown and the historic district of Los Olivos. This area could house more than 4,500 apartments, enough for 13,000 renters. This enclave comprises 19 vacant parcels covering just under 1 million square feet. Still, this is a very active zip code for apartment construction. Nearly 5,200 apartments were built here between 2014 and 2023, the most out of Phoenix’s top 20 most promising zip codes for housing.

More than 4,000 apartments could be built on the 89 vacant parcels in zip code 85040, which is just below Phoenix’s core districts. Close to 11,600 renters could find a home here, our analysis shows. These land plots span a total 6.6 million square feet, nestled south of the Salt River and down to Southern Garden Industrial Park.

Ranking fifth in our top 20, zip code 85020 could hold nearly 1,700 new apartments on its 49 vacant parcels, covering a total 4.5 million square feet. These could be the future homes of more than 4,800 Phoenicians. The perimeter includes Sunnyslope, one of the metro’s century-old communities that's known as the place where the mountain meets the valley. In the last decade, about 450 apartments were built here, with room for more than double that number on parcels that are already zoned for multifamily.

Leveraging all this housing potential in Phoenix is key for obtaining rental affordability in the long run.

Building up for affordable future living

In the next decade, rents in Phoenix are expected to rise along with incomes as part of the city’s economic development. Therefore, we considered three scenarios for rent growth based on population changes and migration trends, as well as the pace of apartment construction. If developers tap into the housing potential in Phoenix, rents will rise from the current median rent of $1,446 to a maximum of $2,600 per month in 10 years, but if apartment construction slows, rents will double and reach $2,900 per month.

The first scenario looked at rent evolution assuming that the rate of apartment construction in the city stayed the same at 2,500 rentals per year. In this case, we would expect rents in Phoenix to increase to $2,800 in the next 10 years.

The second scenario looked at the effect of incentivizing apartment build-out on vacant land through rezoning and increased housing density on rent growth. With a faster pace of construction — of around 3,250 new apartments per year — rents in Phoenix would rise to a maximum $2,600 per month.

The third alternative is based on a reduced pace of construction with only 1,000 apartments completed annually. We considered this option because of the new development restrictions caused by Phoenix’s shrinking water supplies. In this case, rents would nearly double and go up to almost $2,900 by 2032.

We dug deep into the impact on housing availability and rent hikes across the metro area when fully tapping into the potential of multifamily-zoned plots. Still, implementing effective rezoning policies can take the effects to a whole new level.

Rezoning unleashes potential for 40,000+ new apartments

The housing potential in Phoenix would increase by at least 25% beyond the estimated 32,500 apartments if we also look at vacant plots with other types of zoning. In total, there are 1,500 residential lots available in the city, covering more than 145.6 million square feet. Through efficient rezoning policies, this land could be used to build more affordable housing and cover the needs of cost-burdened Phoenicians.

In fact, the local government already started rolling out a few amendments to its development code such as reducing parking space requirements for multifamily projects, lowering minimum acreage for mobile home parks, legalizing accessory dwelling units across Phoenix and increasing density on lots dedicated to single-family homes. The final City Council approval for some of these changes is expected this summer, but there’s a chance that the process won't be finalized until early fall.

Recently, the local government in The Valley has been taking a closer look at the empty land parcels in its own backyard. For example, the city is discussing a potential registry for vacant properties as a way to make sure they are maintained. Owners would need to sign up and be prepared to be contacted by city officials whenever there's an issue with the property or if it needs tending.

What's more, the city is also planning to pitch to developers some of the vacant land parcels it owns in areas with economic growth. In addition to housing, the land could be used to build retail or other projects. However, experts believe that local regulations and costs are obstacles in the way of more apartment construction.

Local regulations and costs as roadblocks to affordable housing

The continuous influx of newcomers in Arizona — and Phoenix, in particular — is the main reason that led to the housing shortage the city is facing. Plus, a disproportionate rise in rent prices and incomes is what fueled the rising affordability issues.

"Wages did not increase at a comparable rate, and more people are finding themselves unable to secure safe and affordable housing," said Jamie Podratz, communications manager at Arizona Housing Coalition.

It seems that the city was heading for trouble even pre-COVID-19, when there were fewer than 30 housing units available for every 100 low-income or extremely low-income households, according to MAG data. Experts working with local housing organizations say that one of the main obstacles in creating more affordable housing are the local regulatory barriers.

"Zoning is a concern. More than 90% of land available for development in Maricopa County is zoned for single-family use, according to MAG. The availability of land that is 1) zoned for multifamily, and 2) affordable, is very minimal," Podratz added, underlining the significant time consumption and high costs of rezoning.

Things get even more challenging when it comes to building apartments in the city's core. Paul Gilbert, land use and zoning attorney, says that rezoning infill land for multifamily uses is "most difficult."

"City councils throughout The Valley continue to show major reluctance to zone infill parcels for multifamily density due to vociferous, well-organized opposition from neighboring single-family property owners. This is true even when the general plan specifically allows multifamily zoning of infill parcels,” added Gilbert, co-founder of law firm Beus Gilbert McGroder PLLC.


RentCafe.com is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the U.S.

For determining the housing potential in Phoenix, we extracted vacant lots larger than 0.5 acres or 21,780 square feet that are likely suitable for construction and added development restrictions according to the City of Phoenix's Planning and Development Department.

We then manually checked and removed parcels that weren't vacant. Additionally, cemeteries, national parks and forests were removed from the vacant land list.

Average rent and completed apartments for each zip code were extracted from the Yardi Matrix database and cover the last 10 years. Median income and median home prices are from Census ACS 2021 one-year estimates.

For the rent forecast, we used regression analysis and considered several metrics: average rent, median rent, renter income, apartment occupancy, home prices, and inflation.

In order to calculate the potential of the buildable area and number of rental apartments, we referred to restrictions and metrics from the Codification of the Zoning Ordinances of the City of Phoenix, Arizona.

For the purpose of this study, the number of estimated apartments has been rounded up.

The maximum number of potential units was calculated as such: maximum unit dwellings per acre for each zoning type was multiplied by total land area.

Fair use and redistribution

We encourage you and freely grant you permission to reuse, host, or repost the research, graphics, and images presented in this article. When doing so, we ask that you credit our research by linking to RentCafe.com or this page, so that your readers can learn more about this project, the research behind it and its methodology. For more in-depth, customized data, please contact us at media@rentcafe.com.

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Alexandra Both is a senior creative writer with RentCafe. She has more than six years of real estate writing experience as a senior editor with Commercial Property Executive and Multi-Housing News. She is a seasoned journalist, who has previously worked in print, online and broadcast media. Alexandra has a B.A. in Journalism and an M.A. in Community Development.

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