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April 2026 – Knowing the Numbers In Commercial Real Estate

Office Market

The Phoenix office market continues to stabilize as it works through post-pandemic shifts in how space is used. Demand remains uneven, with strength concentrated in higher-quality, well-located buildings while older and less competitive assets face ongoing challenges. Vacancy remains elevated compared to historical norms, but leasing activity has shown signs of improvement as companies adjust to hybrid work models. Overall, the market is in a transition phase, with long-term fundamentals supported by population growth and business migration into the region.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 193M 16.5% $30.29 -231K 1M
4 & 5 STAR 69M 25.8% $35.29 -90K 609K
3 STAR 89M 13.0% $28.76 -112K 399K
1 & 2 STAR 35M 7.3 $24.21 -30K 0

INDUSTRIAL MARKET

The industrial market in Phoenix continues to perform well, though it is transitioning from an exceptionally rapid growth phase into a more balanced environment. Demand remains strong due to logistics, manufacturing expansion, and Phoenix’s strategic location for distribution. While new supply has increased vacancy slightly, the market is still fundamentally healthy. Rent growth is moderating from peak levels but remains positive, and long-term demand drivers such as population growth, e-commerce, and supply chain reshoring continue to support the sector.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 520M 11.5% $13.00 -331K 21M
LOGISTICS 375M 13.5% $12.10 -303K 13M
SPECIALIZED 115M 5.2% $14.41 -10K 8.7M
FLEX 30M 9.4% $18.84 -18K 174K

MULTI-FAMILY MARKET

The Phoenix multifamily market is currently facing short-term pressure due to a surge in new construction that has outpaced demand. Vacancy has risen to approximately 11.9%, and rents have declined about 2.8% over the past year . Despite these challenges, demand remains strong, with absorption levels well above historical averages. As construction slows and excess inventory is absorbed, the market is expected to stabilize, with long-term fundamentals supported by continued population growth and housing affordability constraints.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION UNITS UNDER CONSTRUCT UNITS
TOTAL: 433K 11.9% $1,564 292 19K
4 & 5 STAR 212K 12.7% $1,780 223 15K
3 STAR 159K 11.9% $1,401 70 4K
1 & 2 STAR 62K 9.4% $1,146 -1 0

RETAIL MARKET

The Phoenix retail market remains one of the strongest sectors in commercial real estate, supported by population growth, rising incomes, and limited new construction. Vacancy is low at approximately 4.7%, and tenant demand continues to be strong despite some recent store closures . Much of the available space is quickly being backfilled, and competition for quality locations remains high. While rent growth has moderated slightly, it still outpaces national averages, and the limited development pipeline continues to support long-term stability.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 246M 4.7% $26.96 4K 2.8M
POWER CENTER 33M 4.4% $29.95 2K 24K
NEIGHBORHOOD CENTER 92M 5.9% $26.05 6K 740K
GENERAL RETAIL 89M 3.5% $25.93 2K 1.4M

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