Phoenix saw a strong finish to the year with 2.3 million square feet (sf) of retail space under construction in Q4 2023. In 2023, 1.48 million sf were delivered, with 171,301 of that contributed in Q4 2023, indicating a slower pace of completion compared to construction. This slower pace helps match demand and prevents high negative absorption numbers associated with a rapid influx of new space to the market.

“The retail market in Arizona is showing remarkable strength and promising trends that suggest it will remain strong and continue to thrive. For the first time in my 21-year career, vacancy rate is below 5%, and rents are on the rise. Due to a lack of retail development over the past decade and Arizona's growth and dynamic economic landscape, there is a high demand for retail space, which is expected to continue,” said James DeCremer, Avison Young Principal – Phoenix. Retail vacancies in the Valley are at a two-decade low, with 4.9% direct space and 0.1% sublet space vacant. High competition requires ongoing development to meet demand. Phoenix is expanding into the Southeast and Northwest submarkets, offering growth and opportunities for buyers and brokers. Despite new space, the Valley has seen 13 consecutive quarters of positive net absorption since the pandemic.

Phoenix's retail market is thriving, with asking rents reaching a decade-high at $24.36/sf annually and $2.03/sf/month. This marks the highest rents the Valley has seen in recent years and positions the market as a national leader in annual rent growth. The rising rents indicate a competitive market, making it a favorable time for those in the retail sector and signaling economic growth for the Valley.