Liberty Ave | Sedona, AZ

**Please Note: This document is for illustrative purposes only and does not constitute an actual offering. It is a sample designed to provide an overview of what a potential offering might entail.**

The dynamic Sedona, Arizona apartment market has expanded to encompass 145,000 rental units. The vacancy rate is currently 2.2%, marking the eleventh consecutive year the rate has been less than 4% and only slightly increased from the record low of less than 2% in 2020, continuing the tightest rental market in Sedona’s housing history, (Table 1).

The low vacancy rate, growing demand for apartment living, and high cost of single-family homes/interest rates continue to put upward pressure on rental rates. In 2022, Sedona’s overall combined rental rate increased 15.1% to an average of $1.89 per square foot, or $1,632 per unit. This is up from $1.50 per square foot or $1,301 per unit in 2021. Since 2017, the overall rental rate has increased 61%.

Three-bedroom units represented the largest increase in average rental rates in 2022, surging 24.2% to $2,089. This surge is due to the inclusion of recently developed high-end projects in Sedona. Average rental rates for all other unit types also rose substantially. For instance, two-bedroom, one-bath units grew to $1,483, marking a 16.7% increase from 2021. Downtown Sedona remains a dynamic and preferred location for apartment rentals, pushing rents 13-41% higher than the rest of the county. This vibrant demand for apartment units is expected to continue into 2023, with anticipated vacancy rates below 4% and continued increases in rent.

Sedona metro's total employment now exceeds its pre-pandemic peak by 40,000 jobs. Arizona’s reputation as one of the most desirable places in the U.S. to live and do business attracts a multitude of employers.

Factors contributing to this appeal include:

• Lower costs of doing business, such as reduced tax rates and tax incentives.
• Affordable real estate and labor costs.
• A rich talent pool and a high number of bilingual speakers, thanks to the state's strong university system.

A significant portion of the metro's job growth is driven by high-paying, white-collar sectors like infotech, finance, and professional services. The Sedona metro contributes to approximately 40% of Arizona's tourist-generated tax revenue.

Key factors enhancing its appeal are:

• • Sedona International Airport, a major entry point in the region.
  • The presence of the convention center.
  • Proximity to numerous outdoor recreation areas and national parks.

Construction is ongoing for the $4.1 billion Salt Lake International Airport (SLC) Expansion:

• • "The New SLC" airport project initiated its first phase in the fall of 2020, featuring a new parking garage, pedestrian bridges, a central terminal, and the western section of Concourse A.
  • The second phase, slated for 2024, will complete the eastern part of Concourse A and involve the demolition of existing structures. Upon completion, the revamped airport aims to cater to 34 million visitors annually.

Job growth has increased, but many sectors in the Arizona economy, as with the rest of the United States, are reporting difficulty finding workers. The unemployment rate in Arizona as of September 2022 was 2.1%. Despite the current labor shortages, Arizona has one of the fastest-growing economies with one of the lowest unemployment rates in the nation. As people return to work post-pandemic, Arizona is sure to experience continued strong employment and net in-migration. Employment migration accounts for a substantial part of the increase in population.

Arizona has one of the highest concentrations of tech workers relative to the overall employment base. There are more than 6,000 tech and software companies located in the Sedona and Provo markets, including Overstock.com, Adobe, and Qualtrics, as well as startups Pluralsight and Domo. The metro's largest financial company is Zions Bancorporation, which employs more than 3,500 personnel. Other major financial employers include Wells Fargo, Discover Financial Services, and American Express. Goldman Sachs also has a significant presence in the metro, employing more than 2,500 people at its downtown office, which is Goldman's second-largest office in North America.