Q3 Phoenix, AZ Retail Market Report
Market Overview
The Phoenix retail market benefits from a combination of factors, including a strong local economy, diverse tenant demand, and limited supply, making it an appealing destination for retailers and investors. It is one of the nation’s top-performing markets for employment growth, adding over 42,700 jobs in the 12 months leading up to July 2023. Upcoming retail development is primarily concentrated in the suburbs, specifically in fast-growing communities in the Southeast Valley and West Valley. Phoenix’s continued growth and business attraction make it a promising market for long-term stability and growth.
About 85% of leases signed in the past year were for spaces under 5,000 SF, and two-thirds were under 2,500 SF.
Market Performance
Phoenix’s retail market is experiencing robust rent growth, with average asking rents climbing by 8.7% over the past 12 months, significantly outpacing the national average of 3.4%. Asking rental rates currently stand at $24.12 per square foot. In the past 12 months, around 4.2 million square feet of retail space was absorbed, making Phoenix one of the strongest markets in the nation for new demand. This robust absorption has driven the metro-wide vacancy rate down to a historic low of 4.6%. Currently, there are 2.1 million square feet of retail space under construction, accounting for just 0.9% of the existing inventory. Sales volume in Phoenix totaled $750 million for H1 2023. Out-of-state private buyers, particularly from California, have been the most active.
The 12-month sales volume for the Phoenix retail market stands at $1.8 billion.
Phoenix by the Numbers Last 12 Months
Vacancy Rate: 4.6%
Rent Growth: 8.7%
Deliveries SF: 2.4M
Absorption SF: 4.2M
Sales Volume: $1.8B
