Phoenix Retail Market Report
Moderate Supply Pipeline, Demographic Tailwinds Help Balance the Retail Landscape in Phoenix
Period of recovery sets stage for longer-term enhancement. Several factors indicate Phoenix is on the verge of turning the corner after a difficult stretch. Supply pressure is minimal this year, with annual completions expected to fall below 1 million square feet for the first time since 2018. At the same time, space demand is strengthening as retailers are eager to get a foot in the door of the rapidly growing market. Phoenix is projected to have one of the 10 fastest household expansions among major U.S. metros through 2025, with more than 250,000 new households forming over that five-year span. The additional residents will boost spending throughout the market, prompting retailers to lease space. Through the first half of 2021, leasing activity has been the strongest in the East Valley and Pinal County submarkets, as suburban sprawl is generating the need for shopping in outlying areas.