With more than two decades shaping multifamily investments from the ground up, Porter Kyle’s Partner, Taylor Shultz, brings a full-cycle perspective to today’s evolving market. From site selection to capital strategy to lease-up execution, he’s deeply involved in the decisions that determine what actually works – and what doesn’t. Ahead of his appearance at Connect Phoenix Multifamily, SFR & BTR coming up on April 8th, where he’ll join the panel What Still Pencils: Owning, Developing & Repositioning Assets in Greater Phoenix, we asked Taylor to share his take on where the Phoenix market stands today.
Phoenix is no longer behaving like a single market. From your perspective at Porter Kyle, which submarkets are still supporting new multifamily development today – and where are fundamentals, costs or municipal constraints making projects harder to justify?
From our perspective, Phoenix is clearly fragmenting into distinct submarkets with very different development dynamics.
The East Valley and Southeast Valley – including Scottsdale – continue to support new multifamily development. These areas have not experienced the same level of new supply as other parts of the metro, and they continue to command higher rents as a result. We believe these submarkets are in the early stages of a recovery, supported by strong absorption trends. In fact, several East Valley submarkets are already seeing concessions begin to burn off, with some stabilized communities experiencing modest rent growth.
On the cost side, we’ve seen some stabilization – and in certain trades, even modest reductions in costs – which is helping well-located projects begin to pencil again. That said, entitlement timelines remain a significant constraint. Prolonged approval processes are increasing total project costs and ultimately limiting the pace of new starts, even in fundamentally strong submarkets.
By contrast, other areas of Phoenix that have seen heavier recent supply are facing more pressure on rents and concessions, making new development more difficult to justify in the near term.
With construction costs, land pricing and capital costs still elevated, what types of deals are actually penciling in Greater Phoenix right now? Are you seeing more opportunity in ground-up development, repositioning existing assets, or land banking for the next cycle?
In today’s environment, we are seeing some meaningful cost relief on the construction side, which is helping certain deals begin to pencil again. That said, proper design and a quality sub-base play a critical role in this. An efficient design can have a significant impact on total development costs and overall feasibility of a project.
Land pricing and the availability of quality sites remain central to our business. While construction costs and achievable rents are key drivers of feasibility, maintaining discipline on land basis is critical in determining whether a deal ultimately works.
From a strategy standpoint, we continue to have a strong conviction in ground-up development. That’s where we have the most experience and where we believe we can create the most value. However, we also recognize that repositioning existing assets can be highly effective when executed correctly. If an asset is acquired at the right basis and located in a strong submarket, the value-add model can generate compelling returns.
Overall, while capital costs continue to be a headwind, more so as it pertains to the volatility in the debt markets, we are seeing selective opportunities across both new development and value-add models work. We are very focused on disciplined underwriting and the long-term fundamentals of the Phoenix MSA.
How has your underwriting changed over the past 18-24 months – particularly around rent growth assumptions, lease-up timelines and exit cap rates – as Phoenix works through a significant wave of new deliveries?
Over the past 18–24 months, our underwriting has evolved to reflect both the near-term supply pressure and the improving forward outlook in the submarkets we focus on.
On rent growth, we are beginning to see a clearer path forward. When you closely track new deliveries alongside absorption – and factor in that new starts have declined significantly – it supports underwriting modest rent growth over the next several years, particularly in our target submarkets.
With respect to lease-up, we have always maintained a conservative approach. We underwrite longer timelines with the expectation of outperforming, rather than relying on aggressive assumptions. Additionally, the townhome-style BTR product we deliver tends to be differentiated, with limited like-kind competition in the Phoenix MSA, which has consistently supported our ability to achieve stabilization.
On exit assumptions, despite volatility in the capital markets, we continue to observe Class A trades in Phoenix occurring at or below a 5% cap rate. That level of liquidity and pricing provides a degree of confidence in our exit underwriting, even in a more uncertain debt environment.
Developers spent much of the past decade competing through amenity packages. Today, many owners are reassessing those investments. Which amenities are still proving their value in terms of leasing velocity and retention – and which features are becoming harder to justify from an ROI perspective?
Our philosophy has always been to prioritize the design and livability of the homes themselves, as that’s where residents ultimately spend the majority of their time. We believe that thoughtful unit design – functional layouts, larger floorplans, and quality finishes – delivers the most consistent value in terms of both leasing velocity and long-term retention.
Given our typical community size of 100-150 units, we have intentionally avoided highly specialized or capital-intensive amenities such as indoor basketball courts, arcade rooms, or rentable party spaces. In our experience, these features are difficult to justify from an ROI standpoint and are not primary drivers of leasing decisions for our target resident base.
Instead, we focus on amenities that are both highly utilized and cost-effective. A well-designed fitness center and pool remain essential, and we place a strong emphasis on outdoor spaces – such as dog parks and children’s play areas – that foster a sense of community.
Because our larger floorplans tend to attract families, as well as residents with children and pets, these types of amenities consistently deliver the strongest return by aligning with how our residents actually live and use the property.
Phoenix has become one of the most active markets in the country for build-to-rent communities. How are developers and investors currently weighing the opportunity between traditional multifamily projects and BTR developments, especially as policy discussions and financing dynamics evolve?
We continuing to see meaningful diversification among owners and operators as build-to-rent (BTR) has become more established in the Phoenix market.
Historically, traditional multifamily investors had limited options outside of conventional apartment communities, with scattered-site single-family rentals generally not aligning with the operational model of most apartment platforms. The emergence of BTR has created a new, institutionally scalable product type that allows these same investors to expand and diversify their portfolios.
Today, we’re seeing a range of strategies across the market. Some owners and operators are focused exclusively on BTR, attracted to its differentiated renter profile and product positioning. Others remain committed to traditional multifamily – whether garden-style or higher-density podium developments – where they have deep experience and established operating efficiencies. And increasingly, there are groups that see value in both and are actively allocating capital across the two product types.
As policy discussions and financing dynamics continue to evolve, the choice between BTR and traditional multifamily is becoming less about one being universally better than the other, and more about aligning product type with a group’s operational expertise, capital structure, and target renter demographic.
On April 8th, join the leaders from Porter Kyle, Asset Living, National Bank of AZ, Thorofare Capital, Mark-Taylor Companies, Walton Global, Dekker Design, Marcus & Millichap Capital Corporation, Zonda Advisory, and more for a focused look at where multifamily, SFR, and BTR are headed in Greater Phoenix.
Register to attend: www.ConnectPHXMF2026.com | Connect Phoenix Multifamily, SFR & BTR/ Wednesday, April 8th at The Westin Kierland Resort & Spa, Scottsdale.
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