Where Macroeconomics Meets the Resident Experience
by John Carlson
The industry is at a defining moment: one where macroeconomic forces, operational execution and lifestyle value are more interconnected than ever.
Over the past several years, we have moved from a demand-driven expansion cycle into a supply-driven recalibration. While long-term fundamentals remain strong, near-term conditions reflect the weight of elevated deliveries, softer job growth, shifting capital markets, and pacing economic growth.
Today’s reality is clear: Brand presence or luxury product types alone do not guarantee renters. Owners, operators and investors must understand how to capitalize on true differentiators amid an increasingly renter-first market.
A Market Defined by Supply, Not Demand
At the national level, multifamily fundamentals are stabilizing but still under pressure. Vacancy rates have risen to 4.9%, as new deliveries have outpaced absorption for multiple consecutive quarters. At the same time, rent growth has slowed down to 0.2% year-over-year, reflecting a more competitive leasing environment for operators.
In markets like Phoenix Metro, these dynamics are even more pronounced. Phoenix entered an excess supply cycle in 2023, fueled by a surge in development that culminated in 41,756 units delivered across 2024 and 2025. While that pace has begun to moderate, the pipeline remains active, with 17,168 additional units expected to deliver in 2026.
This imbalance between supply and absorption is a defining characteristic of today’s market.
The Path to Stabilization
Real estate cycles are seldom uniform; instead, they are shaped by periods of acceleration, followed by necessary resets. Encouragingly, there are early signs that the market is beginning to rebalance.
In Q4 2025, Phoenix recorded positive net absorption — only the second such quarter since 2021 — a reassuring signal for the market. Even so, the road back to equilibrium remains long, and meaningful rebalancing will require this trend to continue over multiple quarters, not just one.
Looking ahead, we expect oversupply to peak in the third quarter of 2026, with occupancy bottoming shortly thereafter. From there, the market will likely require roughly a year to absorb excess supply before moving into a more normalized recovery phase. That recovery, however, will not be linear across submarkets. Areas with heavier concentrations of new deliveries are likely to heal slower than submarkets with more limited supply pressure.
Short-Term Volatility, Long-Term Growth Opportunity
Is there reason for confidence in today’s market? We believe there is. While current softness is real, it appears cyclical rather than structural. Supply has been the primary source of pressure, but Arizona’s broader economic trajectory continues to support long-term multifamily demand.
The near term has been uneven. In 2025, Phoenix added just 21,700 jobs, or 0.9% growth, making it the third-weakest year for employment gains in the past 15 years, ahead of only 2010 and 2020. That softer job growth, combined with elevated supply, has kept multifamily fundamentals under pressure.
Still, the forward view is more encouraging. The University of Arizona’s Eller Economic and Business Research Center forecasts approximately 42,000 new nonfarm jobs in 2026, or 1.7% growth in the Phoenix Metro. While that pace is below the outsized gains of the last cycle, it points to a healthier and more sustainable trajectory.
More importantly, Arizona’s growth story is being reinforced by durable, long-term drivers: Onshoring, advanced manufacturing, healthcare, and large-scale corporate expansion. TSMC and Amkor are central to that narrative, bringing thousands of high-wage jobs to the region and further establishing Greater Phoenix as a major semiconductor hub. As those campuses expand, they are expected to support incremental apartment demand across the Metropolitan Statistical Area (MSA), particularly in Northwest Phoenix and nearby submarkets where many employees are likely to rent before buying.
Mayo Clinic’s continued expansion in North Phoenix adds another important layer to that momentum. Its campus transformation and the adjacent Discovery Oasis initiative are poised to strengthen the region’s position in healthcare, biotech and innovation, while supporting long-term housing demand in surrounding submarkets.
The broader pipeline reinforces the same theme. The Arizona Commerce Authority (ACA) recently reported 482 active projects statewide from companies seeking to expand or relocate to Arizona. Of those, 336 were in manufacturing, including 54 semiconductor projects and 88 in the battery sector. In 2025 fiscal year alone, the ACA worked with companies that committed to creating more than 24,000 projected new jobs and invest over $31 billion statewide.
At the same time, the development pipeline is beginning to contract. Elevated financing costs and tighter underwriting have reduced new starts, which should help demand gradually catch up with supply.
Together, the message is clear: The near term may remain choppy, but the long-term demand drivers are strengthening. If job growth rebounds in 2026 as projected, it should become a key catalyst for a more meaningful multifamily recovery in 2027 and 2028.
Where Macroeconomics Meets Execution
While macroeconomic forces shape the cycle, performance within that cycle is determined at the property level. Today, that distinction has never been more important.
As supply increases, renters have an abundance of choices and higher expectations in a home. Beyond elevated concessions, renters not only desire but demand an exceptional living experience.
The modern renter is evaluating more than square footage; they are evaluating how a community supports their lifestyle, from ideal locality and caliber of service to variety of on-demand amenities.
Long story, short: This shift is redefining what it means to deliver a high-quality multifamily product.
The Resident Experience as a Differentiator
Over the past decade, multifamily has evolved from delivering housing to creating experiences. Today’s residents expect spaces that are functional, flexible and thoughtfully designed. Work-from-home environments, wellness amenities, smart-home features, and opportunities for connection are no longer differentiators; they are baseline expectations.
Communities that align with how people want to live are better positioned to convert prospects, retain residents, and build loyalty over time. Again, product alone is not enough. Operational excellence, or how a community is managed, maintained and experienced each day, is what ultimately brings that value to life.
At Mark-Taylor, that starts with a people-first philosophy. We believe exceptional resident experiences begin with exceptional employee experiences. Internally, we call this “The Mark-Taylor Way,” a standard grounded in people-centric, five-star service and collaboration at every level of the organization.
In a competitive market, service is what elevates a residency from good to exceptional, and every touchpoint matters.
Non-Negotiables: Quality and Execution as Protection
As new supply enters the market, performance is becoming increasingly segmented by quality, location and operational execution. Submarkets with heavier concentrations of development will take longer to stabilize, while stronger areas with less new supply are likely to recover more quickly. Even within those submarkets, asset-level performance will vary meaningfully.
That is why we view quality not as a premium but as protection. Well-designed, well-operated communities tend to maintain occupancy more effectively, achieve stronger relative rents and reduce reliance on concessions, even in softer conditions.
In a market where excess inventory is expected to remain elevated through mid-2027, quality and execution become more than advantages, they become risk mitigation.
Discipline in a Competitive Environment
The current cycle also underscores the importance of discipline. Given, transaction activity in 2025 showed signs of recovery but remains below long-term averages. Pricing has adjusted as investors focus on acquiring assets below replacement cost, while elevated financing costs continue to shape deal dynamics.
Operationally, discipline means staying data-driven in the form of understanding submarket trends, monitoring absorption and adapting strategies in real time.
It also means maintaining a long-term perspective: The goal is not to react to short-term pressure but position assets for long-term success.
What’s Next in Multifamily?
Despite the ups and downs of the market, the multifamily industry remains firmly rooted in its efforts to provide housing that meets the needs of renters.
As supply begins to moderate and demand continues to strengthen, we expect the market to find its footing in late 2026, with more meaningful recovery taking shape in 2027 and beyond. Markets like Phoenix Metro, supported by population growth, economic investment and long-term demand drivers, are well positioned for that recovery.
For operators, the path forward is clear: It requires a balance of macroeconomic awareness and operational excellence. This, too, calls for a strong commitment to quality and a disciplined approach to navigating change.
Success in multifamily is not determined by the cycle itself, it is determined by how well you operate within it. Quality, both in product and in experience, will continue to lead.
