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Market Report

Phoenix Retail Market Report

3Q 2022

Booming Population Ignites Vendor Demand;
Evolving Consumer Behavior Shifts Builders' Focus

Retailers respond to strong rate of household formation. Retail fundamentals are outperforming historical norms in Phoenix, with recent demographic trends providing strong demand tailwinds for retailers. Correlating with the metro's above-average job growth, nearly 47,000 new households were formed during the 12-month span ending in June, the highest number among major metros outside of Texas. This prompted vendors to absorb over 4.1 million square feet of retail space on a net basis over the past year, lowering vacancy by 170 basis points — the largest compression recorded across major U.S. metros. Standout absorption allowed vacancy to tighten by at least 60 basis points in all 11 of the metro's submarkets. Most notably, West Phoenix and Scottsdale hit record-low rates at 4.0 and 4.1 percent, respectively, with a negligible speculative pipeline in Scottsdale suggesting that further local contraction is likely.
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