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Category: Net Lease Retail, Retail Tags: AZ, Phoenix

Phoenix, AZ  Retail Market Report

Market Overview

The Phoenix retail market continues to be very competitive due to strong demographic trends, increasing income, and job growth. Aggressive rent growth, driven by low availability and strong consumption, has positioned Phoenix as a top market for rent increases. Phoenix continues to excel in employment growth, with 43,200 jobs added in 2023, resulting in a total gain of 166,000 jobs since before the pandemic, ranking it sixth in the nation. Phoenix’s strong educational institutions, including Arizona State University and Grand Canyon University, support a robust talent pool, further supported by partnerships between employers. More factors such as relative affordability, job opportunities, and business-friendly regulations have attracted a steady influx of residents, contributing to Maricopa County being the fastest-growing county in the U.S. The market is expected to remain robust in the near term, supported by favorable demographics and economic conditions.



  • Tenant demand in Phoenix’s retail market remains strong due to factors such as net migration, population growth, and rising incomes, leading to a record-low vacancy rate of 4.7%.
  • The surge in demand post-COVID-19 has given landlords substantial pricing power, with leases typically featuring minimal concessions and annual escalations.
  • Phoenix’s attractiveness for businesses is evident with significant investments from companies like Taiwan Semiconductor Manufacturing Company and Intel, creating thousands of high-tech jobs and driving economic growth in the region.


Rents | Vacancy | Construction

Phoenix’s retail market stands out for its high rent growth, driven by low availability, population increases, and strong consumer spending. This has resulted in an 8.2% rise in average asking rents over the past year, significantly surpassing the national average. While rent growth is expected to moderate to around 5.9% by the end of 2024 due to an anticipated economic slowdown, Phoenix’s steady demographic trends are projected to maintain its position as one of the nation’s top-performing markets in the long term. Limited new construction of only 1.1 million square feet delivered in the past year has contributed to a decade of steady improvement.


The market has seen significant demand, with 1.7 million square feet of net absorption over the past year, ranking it among the top 10 markets in the nation. With developers and lenders exercising greater discipline, only 1.2% of inventory is currently under construction, mainly focused on high-growth suburban areas. Redevelopment projects, particularly in enclosed shopping malls, have enhanced the market by replacing outdated stock with higher-quality spaces. The conservative construction pipeline is expected to maintain property fundamentals, keeping vacancies low and rents increasing steadily.



Throughout 2023 and into early 2024, investment activity in the Phoenix retail market remained subdued due to factors like higher interest rates and economic uncertainty. Total transaction volume amounted to approximately $1.7 billion over the past year. Well-positioned retail centers with desirable tenant mixes attract competitive interest, as evidenced by transactions like the $27.4 million sale of the Northsight Crossing shopping center to a private investor. Private individual investors dominate deals in the $1 million to $5 million range, drawn by the potential for stable returns and investment diversification.


By The Numbers | Last 12 Months | Source: CoStar Group

  • Vacancy Rate: 4.6%
  • Rent Growth: 8.2%
  • Deliveries in SF: 1.1M
  • Absorption in SF: 1.7M
  • Sales Volume: $1.7B


To read a previous Phoenix Retail Market Report, click here.

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