North Tempe vs. Central Tuscon: Which University Submarket Is A Better Investment?

While ABI’s North Tempe vs. Central Tucson Submarket Mashup doesn’t proclaim which multifamily market is a better investment, it certainly sheds some light on the topic. We spoke to ABI director of research Tom Brophy, who clarified some key differences between North Tempe and Central Tucson, home of ASU and U of A, respectively.

Using density as a measure of investment potential is more difficult than you might think. “Although most people would consider the North Tempe/University submarket to be more dense than the Central Tucson/University submarket, especially in light of all NTU's current vertical construction frenzy, that's simply not the case,” Tom tells Bisnow. “Not only is the CTU submarket larger in land size, some 42% greater than NTU, CTU is also 5% more dense per square mile.”

ABI’s research found NTU’s residents have slightly higher incomes than those living in CTU. Approximately 32.6% of the region’s resident workers earned more than $40k in 2014, while 40.3% earned between $15k and $40k, and 27.1% brought in less than $15k. Of CTU’s resident workers, 23.9% earned more than $40k, with 45.7% bringing home $15k to $40k and the remaining 30.5% earning less than $15k.

“NTU, comparative to population, has seen an absolute explosion in job creation from 2013, moving forward with upwards of 8,000 announced jobs in that submarket alone,” Tom says. “That breaks down to one new job for every 14 residents. CTU, as with the Tucson Metro as a whole, has generally lagged behind the more robust growth of NTU.”

CTU's economic fortunes have been turning for the better with Caterpillar's regional headquarters’ move to the region, Banner-University's massive $400M expansion, and periphery employment opportunities such as Comcast's thousand-person hiring spree for its new call center, Tom says.

NTU's overall job growth, especially in higher-wage jobs, has raised median and per capita income levels from 2000 Census levels 6.7% to $31,600, and 17.3% to $17,556, respectively, he says. CTU had greater percentage increases, though smaller values, in both the median and per capita income categories; median income increased 17.4% to $27,015, and per capita income grew 25% to $17,615, from 2000.

In terms of sales, NTU is seeing a higher market velocity (above), and sales prices are higher in terms of price per unit and price per foot, even though properties being sold were built in the early '80s, the same period as those in the CTU submarket.