Phoenix retail market report
The Phoenix retail market remained strong through the second quarter of 2022, as capital markets showed pricing strength in addition to declining vacancy rates across the valley. The demand for retail properties continued to outpace deliveries, as total available space declined for the 7th consecutive quarter. The outlook for the second half of 2022 remains very positive with no obvious signs of an impending slowdown in retail demand ahead.
New deliveries brought the total existing inventory to 187,078,032 sf. At the end of Q2, there was 1,468,972 sf of retail space under construction.
Phoenix recorded its seventh consecutive quarter of positive net absorption with a gain of 866,491 sf in Q2 2022.
Market rents continued to climb, reaching an all-time high of $21.21 psf at the end of Q2. The average market rent was highest in the Scottsdale submarket at $29.94 psf.
Total available space declined in the second quarter, decreasing from 12.9 msf to 12.4 msf.
The direct vacancy rate declined to 6.5% in Q2, while the sublet vacancy rate remained at 0.1% of existing retail inventory. At the end of the quarter, there was 12,307,294 sf of vacant retail space in total.
Investment activity in Q2 2022 amounted to approximately $434.8M, slightly below the $464.8M in total investment volume in Q2 2021. The average price per square foot came in at $232.38 in Q2 2022.
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