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November 2026 – Knowing the Numbers In Commercial Real Estate

Office Market

The Phoenix office market continues its gradual recovery as improving tenant demand and declining inventory support stabilization. Vacancy fell to 15.4% from a 17.2% peak in 2024, while 1.5 million SF of annual net absorption exceeded 696,000 SF of deliveries. Asking rents increased 2.8%, although generous tenant improvement allowances continue to affect effective rent growth. Demand remains concentrated in premium, amenity-rich buildings, while older properties face challenges. Limited new construction and ongoing demolitions should support further vacancy improvement through 2027, despite economic uncertainty and sluggish employment growth.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 193M 15.4% $31.59 753K 868K
4 & 5 STAR 70M 23.5% $37.62 545K 668K
3 STAR 89M 12.2% $29.45 298K 200K
1 & 2 STAR 35M 7.3% $24.85 -90K 0

INDUSTRIAL MARKET

The Phoenix industrial market continues its recovery as strong tenant demand outpaces new construction. Vacancy declined from 12.3% a year ago to 10.1%, with 23.5 million SF of net absorption exceeding 14.5 million SF of deliveries. Logistics, advanced manufacturing, semiconductor operations, and data centers remain key demand drivers. Asking rents increased 3.0%, outperforming national growth. While large distribution facilities and small-bay properties maintain stronger occupancy, mid-sized warehouses face elevated vacancy. Slowing deliveries should support gradual improvement through 2027, although excess inventory and economic uncertainty remain challenges.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 530M 10.1% $13.26 2.6M 22M
LOGISTICS 380M 11.7% $12.27 2.3M 14.5M
SPECIALIZED 120M 5.3% $14.93 306K 7.4M
FLEX 30M 9.1% $19.17 -7K 86K

MULTI-FAMILY MARKET

The Phoenix multifamily market continues its gradual recovery as renter demand outpaces new supply. Net absorption reached 22,723 units over the past year, exceeding 15,336 deliveries and helping vacancy decline to 10.4% from a 12.7% peak. Despite improving occupancy, asking rents remain down 0.9% annually, with aggressive concessions continuing at newly built properties. Approximately 15,524 units remain under construction, down more than 60% from peak levels. Slowing deliveries should support further vacancy improvement and a potential return to positive rent growth in 2027, although elevated inventory remains a challenge.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION UNITS UNDER CONSTRUCT UNITS
TOTAL: 440K 10.4% $1,563 1,427 16K
4 & 5 STAR 209K 10.6% $1,797 1,167 11K
3 STAR 166K 10.6% $1,408 262 4K
1 & 2 STAR 65K 9.6% $1,118 -2 55

RETAIL MARKET

The Phoenix retail market remains fundamentally strong despite increased store closures and a modest rise in availability. Vacancy stands at 4.5%, while 3.2 million SF of net absorption over the past year reflects healthy demand from retailers backfilling vacant space, against 3.3 million SF of deliveries. Asking rents increased 4.2%, keeping Phoenix among the nation’s top five major markets for rent growth. With 2.3 million SF under construction and most of the pipeline already preleased, limited supply pressure and continued tenant demand should keep vacancy low through 2027, although rent growth may moderate.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 248M 4.5% $27.21 383K 2.3M
POWER CENTER 33M 3.8% $30.02 -60K 190K
NEIGHBORHOOD CENTER 92M 5.7% $26.37 303K 577K
GENERAL RETAIL 91M 3.7% $26.45 173K 1.3M