Phoenix, AZ – Avison Young recently released its First Quarter 2024 Phoenix Retail Market Report.

In Q1 2024, Phoenix's retail vacancy rate slightly increased from the historic low of the previous quarter. While last quarter's direct vacancy stood at 4.9%, it rose by just 30 basis points to 5.2% in Q1 2024. Despite this uptick, the rate remains near record lows for the Valley and is among the lowest nationally, with the lowest vacancy submarkets being West Phoenix, Northwest Phoenix, the Airport Area, and Scottsdale. The slightly higher vacancy rate can be attributed to the significant new construction activity in the area, with over 1 million square feet (sf) of new retail space delivered to the market in the past year and an additional 2.7 million sf currently under construction.   

“Phoenix remains a bellwether for retail real estate in the U.S. showcasing remarkably low vacancy, robust absorption, and highs in rental rates to start 2024. Since the lows experienced during the pandemic, rents have increased nearly 25% prompting developers to fill this need with nearly 2.7 million sf of space being constructed during Q1. When delivered, this new space will certainly give occupiers a few more options, but with the fundamentals remaining strong and foot traffic data showing demand, the future looks bright for retailers and owners of retail property in Phoenix,” said Matt Milinovich, Avison Young Principal – Phoenix.

In Q1 2024, Phoenix saw its first negative net absorption since the pandemic, ending the quarter with -397,567 sf due to lease expirations and permanent closures of some larger retailers. Despite this, since Q4 2020, Phoenix has rebounded, creating a national leading market with demand surpassing availability. Despite the quarterly decline, the past 12 months’ net absorption remained positive at 2 million square feet. With limited new construction managing demand, upcoming developments are expected to impact vacancies and absorption rates, but the market should remain tight.

In the Phoenix retail market, asking rents have shown a consistent upward trend over the past seven years, even amidst the challenges of the pandemic. Notably, rents have not only increased overall but have also risen consistently across various retail centers. Lifestyle centers have led the way with an average asking rent of $33.70 per square foot, followed by power centers at $27.33 per square foot.

Comparing year-over-year data, in Q1 2023, the average rent stood at $22.52, indicating an increase of $2.25 or 8.8%. Since the middle of the pandemic in Q1 2021, rents were at $19.77, reflecting a substantial growth of 23.9% by Q1 2024.

Avison Young creates real economic, social and environmental value as a global real estate advisor, powered by people. As a private company, our clients collaborate with an empowered partner who is invested in their success. Our integrated talent realizes the full potential of real estate by using global intelligence platforms that provide clients with insights and advantage. Together, we can create healthy, productive workplaces for employees, cities that are centers for prosperity for their citizens, and built spaces and places that create a net benefit to the economy, the environment and the community.

Avison Young is a 2023 winner of the Canada's Best Managed Companies Platinum Club designation, having retained its Best Managed designation for 12 consecutive years.

www.avisonyoung.com

For more information:

Media Contact:
Darcie Giacchetto, Media Relations & Content Specialist – Southwest: +1.949.278.6224