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Flagstaff Could be Arizona’s Next Big Apartment Market

Flagstaff AZ signArticle Originally Written in the Phoenix Business Journal and Published October 5, 2016
The national wave of new apartments and multifamily property sales that has dominated big markets such as Phoenix since the recession could be making its way to Flagstaff.

A new report ranks Flagstaff and Northern Arizona University sixth nationally for new apartments designed for college students coming online next year.

Dallas-based Real estate research firm Axiometrics looked at new private student housing apartments are being built and planned across the U.S.

NAU ranks sixth with 1,441 units planned for next year.

That’s in the same company as the University of Missouri, Clemons University and Baylor University.

Private apartment developers have 833 new student-oriented apartments slated for near Arizona State University’s main campus in Tempe next year, according to Axiom.

There are more planned apartments near NAU next year than other big colleges such as Ohio State University (480 units), University of Wisconsin (830) and University of Minnesota (450), according to Axiom’s research.

Private developers have had a big push in recent years in building private apartments near college campuses. That tide is making its way to NAU which has more than 29,000 students.

Jay Denton, senior vice president of analytics for Axiometrics, said privately developed student housing comes, and goes, in waves.

“One thing that differentiates student housing from conventional apartments is that the distribution of new supply can change dramatically year to year. As construction near one school meets the demand, a building boom will begin in another university market,” Denton said.

It’s not just a wave of apartment developments that could be migrating north from Phoenix to Flagstaff.

Real estate investment groups and landlords have been buying and selling multifamily developments in the Phoenix area in high volumes. There were 102 apartment transactions in the third quarter in the Phoenix metro area totaling more than $1 billion, according to Kidder Mathews, a Seattle-based commercial real estate firm.

Now, there’s a big new apartment sale in Flagstaff.

A 252-unit Class A complex called The Lodge has sold for $43.6 million.

Utah-based SK5-ELA LLC bought the 13-acre Flagstaff property from Clear Sky Lodge LP.

The Utah buyer is an entity made up of Keller Investment Properties LLC and AJ Real Estate LLC, according to Arizona Corporation Commission records.

Clear Sky Lodge is an entity formed by Clear Sky Capital of Phoenix and Vancouver-based Narland Properties.

Cushman & Wakefield Executive Managing Directors David Fogler and Steven Nicoluzakis brokered the sale.

“The buyer owns two other multifamily communities in Flagstaff and had been trying to acquire an additional property in the market for some time. They recognized The Lodge as one of the premier rental communities in Flagstaff and moved quickly once it became available,” said Fogler.

Flagstaff is still a relatively small market population-wise.

The city of Flagstaff has a population of just over 70,300. The Flagstaff metro area has a population of 135,800 and median age of 31, according to numbers from DataUSA and the U.S. Census Bureau.

Flagstaff’s population grew by 6.4 percent from 2010 to 2015 that compares to 9.2 percent growth for Maricopa County, according to the Census Bureau.

There are 4.17 million people living Maricopa County.

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