Phoenix’s retail market remains tight, fueled by strong demographics, income growth, and job gains that have kept space availability low. Over the past year, Phoenix absorbed 770,000 SF, ranking among the top 15 U.S. markets for retail demand, with quick-service restaurants and discount retailers driving leases. Limited construction, with just 1.7 million SF delivered, and less than 20% of new projects available for lease, keeps supply pressures minimal.
Investment has slowed, with retail transactions down 45% from 2021-2022 highs, though smaller deals remain active with cap rates between 5% and 8%. Rent growth surged by 6.3% in the past year, totaling 32.2% over five years, giving landlords strong pricing power. However, rent increases are expected to moderate to around 3% annually by 2025 due to economic pressures. Phoenix’s economy remains robust, adding nearly 49,000 jobs last year, supported by major expansions from TSMC and Intel.
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