Why Retail Investors Continue to Bet on Phoenix
The resilient local economy and in-migration trends in Phoenix have strengthened the retail market. Leasing volume is elevated as new investors hunt for quality assets in the Valley of the Sun. Phoenix consistently ranked among metros with high vacancy rates in the past decade but that hasn’t impacted rents. Year-over-year rent growth is at six percent, and many retail tenants have been opening up shops over the last 18 months. Demand is concentrated in grocery, pharmacy, home improvement, drive-thrus, and hobby stores. Development has moderated over the past ten years despite the nearly one million square foot pipeline, minimizing supply-side risk. These impressive fundamentals have attracted developers to the area, with the news of one of the first open-air shopping malls to be built in the Western U.S. in over a decade. The power center is slated to open in the coming months in Surprise, an Arizona suburb experiencing rapid population growth along the Loop 303 Freeway with bolstering shopping demand, according to CoStar. The 700,000-square-foot shopping mall will include national tenants such as Five Below, HomeGoods, T.J. Maxx, Marshalls, PetSmart, and Ulta.
