Phoenix’s retail market remained one of the strongest in the nation in Q2 2025, with vacancy holding at a record-low 4.5% and annual net absorption reaching 2.8 million SF. Demand from grocery, fitness, dining, and healthcare tenants continued to outpace new supply, supported by strong population growth and robust consumer spending. Rent growth rose 5.2% year-over-year to an average asking rate of $25.90/SF, outpacing the national average, while limited construction—just 1.8 million SF underway—kept upward pressure on rents. Necessity-based and experiential concepts like Sprouts, Aldi, EOS Fitness, and Dutch Bros were among the most active in securing space, especially in the West and Southeast Valley submarkets.
On the investment side, retail sales totaled $2.5 billion over the past year, about 20% above pre-pandemic norms, with cap rates ranging from the mid-5% for single-tenant net lease properties to the high-6% range for multi-tenant centers. Developers focused on grocery-anchored and build-to-suit projects for national brands, maintaining a disciplined supply pipeline. With favorable job growth, steady in-migration, and a business-friendly climate, Phoenix’s retail sector is expected to sustain low vacancy and solid rent growth into 2026, even amid broader economic uncertainty.
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