Phoenix retail market report

Direct vacancy in the Phoenix retail market minimally ticked down to 5.2% in Q1 2025, with average time on market stretching to 7.6 months. Retail space availability has increased modestly, driven by a wave of store closures, including both national chains and small businesses. While this uptick in vacancy has led to a slower pace of net absorption, it also reflects a reshuffling rather than a collapse in demand. At 5.2%, the vacancy rate remains well below pre-pandemic levels, indicating that underlying fundamentals remain strong.

Phoenix market asking rents reached $25.19 per SF annually in Q1 2025, with rent growth easing to 3.4% year-over-year. After years of red-hot rent growth, the Phoenix retail market is settling into a more sustainable rhythm. The current 3.4% annual growth rate reflects a cooling from recent highs, as the market adjusts to broader economic normalization and moderating consumer spending. Still, rents remain near record highs, bolstered by solid tenant performance and a limited construction pipeline.

Shopping center visits reached 91% of the Q4 2019 benchmark in Q1 2025, highlighting resilient in-person consumer engagement. While not fully back to pre-pandemic highs, foot traffic in Phoenix retail centers remains impressive. At 91% of 2019 levels, consumer activity is holding steady, reinforcing the continued relevance of brick-and-mortar retail, particularly for tenants offering value, convenience, or experiential elements. This level of busyness supports strong tenant sales and helps justify high rents in key corridors.