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Market Report

Phoenix Retail Market Report

2024 Investment Forecast

Population Growth Necessitates Retailer Expansions,
Helping Minimize Impact of Elevated Supply

Wave of new households keeps tenant demand heated. Phoenix was one of just three major markets to boast record-low vacancy in both its multi- and single-tenant sectors exiting 2023. While a 15-year high delivery slate this year will bump up these metrics, Phoenix’s historical tightness should thwart any potential of a substantial rise. Overall vacancy entered the year at 5.0 percent, nearly 250 basis points below its prior five-year mean, which was the largest difference among any major market. This shortage of viable spaces across the metro will competitively position new available supply to attract tenants, allowing vacancy to close out the year below any rate noted prior to 2023. Also limiting upward pressure, Phoenix’s appealing demographics should help keep net absorption above the long-term annual mean of 1.9 million square feet in 2024. Regionally strong population growth is fueling rapid housing creation, in turn raising consumer demand for necessity-based and experiential retailers in areas of heightened multifamily construction. Avondale, Goodyear and greater West Phoenix stand out in this regard, as they collectively expect the delivery of over 8,000 apartments this year. 

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