The Phoenix retail market remains fundamentally tight despite a modest increase in space availability over the past 18 months. Strong demographics, rising incomes, and low unemployment continue to drive robust tenant demand, while limited new construction has helped keep availability historically low. As of the fourth quarter of 2025, the availability rate has risen to 5.1 percent, up from 4.3 percent in late 2023, but it remains below previous cycle lows and the Valley’s historical norms. Competition for space is high, and tenant retention remains strong, reflecting the market’s underlying stability.
The recent uptick in closures has created opportunities for other retailers to expand, particularly off-price stores, dollar stores, and experiential tenants, which have helped backfill vacant big box sites and contributed to positive net absorption. New construction has remained modest, with 1.3 million square feet delivered over the past 12 months, well below pre-COVID averages, and the current pipeline of 2.7 million square feet is largely concentrated in rapidly growing suburbs such as Buckeye, Surprise, and Queen Creek. These areas benefit from strong population growth, ample developable land, and limited existing retail, keeping supply-side pressures contained and supporting continued improvement in market fundamentals.
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