Phoenix Retail Market Report

Residential growth continues to produce tailwinds for vendor demand. The 70 percent gain in Phoenix’s retail sales volume over the past five years can mostly be attributed to its ongoing population boom, which has jolted consumption. During this span, the metro welcomed a net 330,000 new residents, with its regionally affordable housing and relatively low income tax spurring relocations from Southern California and the Midwest. Continued expansion will assist Phoenix in weathering 2023’s labor market flux, as its pace of net in-migration is projected to be the second strongest among major U.S. metros. Recent leasing activity confirms retailers are expanding local footprints in response to population growth, with Burlington signing five leases during 2022 and fitness club EōS signing three. These commitments equated to more than 400,000 square feet of space, helping to compress vacancy well-below the 20-year mean. Looking ahead, a slower pace of development should increase the likelihood of a near-term vacancy decline, with nearly 80 percent of the space slated for completion accounted for as of January.