Phoenix retail metrics remained stable through mid-year 2018. Minor setbacks in the form of big-box moveouts hindered further growth, though gross leasing activity remained strong and is set to meet recent annual levels.
It is important to note some of the factors that are fueling demand for retail space in the Valley. Two of the most important demand-side drivers for retail space include population and employment growth—and Phoenix is among the fastest growing metros nationally for both indicators.
In Q2 2018, the marketwide vacancy rate declined 10 basis points (bps) year-over-year and remained flat quarter-over-quarter, settling at 8.4%.
The Phoenix retail market’s average asking lease rate reached a decade high in Q2 2018, settling at $17.96 per sq. ft. (NNN).
Retail market fundamentals were stable in Q2 2018, despite numerous big-box moveouts across the Valley. Nearly 350,000 sq. ft. of big-box space
was absorbed and new supply remained heavily preleased.