Phoenix retail market report

Q4 2024

5.3%

Direct vacancy remains tight due to low supply and strong tenant demand

Competition in the Phoenix retail market remains fierce, driven by low vacancy rates and minimal new multi-tenant supply. As Phoenix continues to grow as a popular destination, demand for quality retail options rises, attracting well-known tenants like Better Buzz Coffee and high-profile restaurants opening at Scottsdale Fashion Square. However, tenants face the challenge of limited space and rising rents across the valley, with the lowest vacancy rates in Scottsdale and Northwest Phoenix, intensifying competition.

$25.43

Asking rents remain high while year-over-year rent growth slows

Since the end of 2020, asking rents in the Phoenix retail market have shown rapid and sustained growth, rising from $19.75 per square foot in Q4 2020 to $25.43 per square foot in Q4 2024—an increase of $5.68 over four years. This significant jump reflects the market’s tight conditions, characterized by low vacancy rates, limited new construction, and strong tenant demand for premium spaces. Landlords have capitalized on these dynamics to push rents higher, supported by Phoenix’s growing population, robust economy, and expanding consumer base.

98%

Shopping center foot traffic has returned to 98% of pre-pandemic levels

The global pandemic of 2020 drastically reshaped the retail landscape, accelerating e-commerce sales and driving demand for shopping experiences that accommodated social distancing regulations. Many retailers faced significant challenges, while consumer preferences shifted toward outdoor and mixed-use shopping centers, especially in Phoenix. Despite these disruptions, the market has demonstrated resilience, with shopping center foot traffic rebounding to 98% of its Q4 2020 levels by the end of Q4 2024.

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