Multifamily housing is running on a parallel track with single-family residences in Gilbert—a shortage of supply and resultant rising costs, according to rental data.
While experts said apartment projects often draw objections from residents when before the planning commission or town council and even have become a campaign issue for some council candidates, data indicates Gilbert is short of needed stock to support job and population growth. That also is true across the Phoenix area.
“What happened in the ’50s and ’60s is people came here with the promise of everybody having a single-family house,” Arizona Housing Department Director Tom Simplot said. “Well, things have changed, and we have become a more urban place that requires different types of housing. People need to see that.”
The supply shortage in town and across the Valley as well as Gilbert’s affluence are factors in the town’s rising rent rates, among the highest in the region, officials said. Rent in Gilbert averages $1,843 per month, according to rentcafe.com, fourth highest among peer cities in Maricopa County behind Scottsdale, Surprise and Tempe.
Multifamily occupancy in Gilbert is above 97%, according to Tom Brophy, national director of multifamily research and analytics at Collier’s International, a global commercial real estate services company.
But town officials said they do not expect the mix of multifamily to single-family housing, which has stayed fairly steady in the past decade, to change as the town builds out.
“We don't have a whole lot of big parcels left over,” Gilbert Development Services Director Kyle Mieras said. “And those that do, I don't know that they'll be heavy with multifamily. I see more single-family or industrial or even some commercial, but I don't see a whole lot of multifamily moving forward unless … there are already sites that are zoned for multifamily or there are sites that make sense for it somehow that have just been overlooked.”
Low stock
Gilbert has fewer apartment dwellers as compared with its peer cities in the Valley. Only about 11% of the households in Gilbert are living in apartments, according to American Community Survey 5-year data from the U.S. Census Bureau. Tempe leads the region at 49%, but it is home to Arizona State University. Still, the percent of Gilbert’s households in apartments is about a third of Scottsdale and Phoenix figures and fewer than half of Chandler and Mesa.
Mieras said he believes that is because of the way Gilbert grew over time.
“It started largely as a single-family residential community,” he said. “That's where we saw a lot of these master-planned communities, like Power Ranch, Morrison Ranch, Seville, Cooley Station. A lot of areas started off as single-family in nature. And then, as things progressed over time is when you started to see a little bit more of the multifamily come in.”
Simplot said the number of apartments is not enough, and not just in Gilbert.
"All cities and towns in Arizona are far below in terms of designating areas for apartments,” he said. “I'll use Buckeye as an example. I believe they have about 3% of land set aside in the General Plan (a city document that sets forth vision and policies for development) for multifamily. That is a big part of the problem. We need to evaluate what are the needs for multifamily living in every city. But everywhere, it's below where it needs to be.”
Like Buckeye, Gilbert has only 3% of its land zoned for multifamily housing, according to town data, compared with 68% for single-family. The remainder is in business or public uses.
Brophy said part of the problem stems, as it does for the single-family housing shortage, from the recovery from the Great Recession. Just as with single-family homes, developers pulled back on how many units they were delivering.
“Most builders, at least that particular time, were thinking, ‘oh, you know, we've overbuilt too much,’” he said. “And I'm like, ‘we're not building enough because if you just look at net domestic migration, everything's starting to pick back up. And if you guys pull off the accelerator right now we're heading into a housing crisis.’ And now fast forward seven years, I guess I was right.”
The idea that there are not enough apartments in town might not match residents’ perceptions, but Mieras said he suspects it is because apartment projects are highly visible along main traffic routes.
“A lot of people have said ‘all of a sudden, there's all this multifamily coming out of the ground,’ and really it's been pretty consistent,” he said.
U.S. Census data supports him. The percentage of households in apartments in Gilbert has stood fairly flat, ranging between 10.6%-11.4% dating back to 2012.
Rising rents
With too-small supply, rising rents become a concern. Average rent was under $1,000 as recently as November 2016, according to rental research site zumper.com. But rising home prices increased competitiveness for apartment spaces as they drive people to rent, said Barry Cox, a vice president for John Burns Real Estate Consulting.
“I can tell you globally, as we are seeing softness in the housing market in general on the for-sale side, our thesis is that's going to be supportive of rental rates in the near term,” he said.
Mieras said the town cannot plan for affordability in its approval process, but the town’s relative affluence may attract builders of higher-end apartments.
“Multifamily developers will come into the community knowing the types of rents that can be supported by the folks that will live there,” he said.
As a result, they build high-end apartments with amenities such as pools and gyms, he said.
“And then don't forget too, the price of land is not cheap,” he said. “So in order to make a lot of these projects pencil, they've got to hit a certain price point or a certain lease rate in order to make the project work.”
For example, monthly rents at The Tyler, the apartments at the Epicenter mixed-use complex in Agritopia, range from $1,865 to $3,271.
Planning Manager Eva Cutro said the town is seeing a wide variety of projects from mixed use that the town has been encouraging to smaller bungalow-type multifamily to the densest of projects.
“So we’re seeing both ends of the spectrum,” she said.
Neighbor objections
Whatever the need, neighboring residents are often opposed to the projects, citing density, traffic and crime. Mieras said the town tries to address a lot of the concerns on the front end of the planning process.
“If we have rezoning requests or land use changes come in, traffic is looking at it; the police department is looking at it; public safety; fire,” he said. “All of the different reviewing departments take a look at it. That's how we end up making our recommendations to the planning commission and ultimately Town Council.”
Cutro said the highest-density projects tend to be zoned into village settings that can better accommodate the traffic but also have walkability as a component.
As for crime, Police Chief Michael Soelberg said additional apartments are no different than any other new project in town.
“Obviously they're more condensed in a smaller location,” he said. “[But] if I add a new neighborhood of houses, on average, I probably have a call or two each day in that neighborhood. Similarly, if we build a new apartment complex, I'm on average, probably going to have a call or two at an apartment complex. It's more condensed geographically, but per capita-wise, we are not seeing a difference.”
Brophy, who has done multifamily housing research from a variety of perspectives over 20 years, said it is important to get past the stigma of renting.
“I've always heard, ‘oh, well, we don't want the renters,’” he said. “It's like, ‘OK, really? So $1,800-plus rent, they're going to bring in a riffraff crowd?’”
Mieras said Gilbert’s economic development team routinely hears from businesses they are trying to attract questions about where their workers will live. It demonstrates that having some multifamily housing is an important part of the mix.
“There is no one single bullet that will solve the housing crisis in Arizona,” Simplot said. “Instead, it requires a close look at all of our local ordinance and zoning processes and state laws and financing mechanisms to find a path toward building enough housing to accommodate our continued growth in Arizona."
Tom Blodgett Senior News Editor | Gilbert @sp_blodgett
Meet Tom Tom Blodgett joined Independent Newsmedia, Inc., USA, in 2022, when the company acquired Community Impact Newspaper's Phoenix-area properties. Raised in Arizona, he has spent more than 35 years in journalism in the state.
Community: He has served as an instructional professional in the Walter Cronkite School of Journalism and Mass Communication since 2005, and is editorial adviser to The State Press, the university's independent student media outlet. He also is director of operations for an 18U girls fastpitch softball team from Gilbert.
Education: Arizona State University with a BS in Journalism.
Random Fact: He lived in Belgium during his freshman year of high school.
Hobbies: Tweeting enthusiastically about ASU softball (season-ticket holder) and grumpily about other local sports (pessimistic fan).
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