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August 2026 – Knowing the Numbers In Commercial Real Estate

Office Market

The Phoenix office market continues its gradual recovery as improving demand combines with accelerating demolitions to reduce excess inventory. Vacancy has improved to 15.9%, down from a 2024 peak of 17.1%, as nearly 1.9 million SF of office space was removed from inventory over the past year. Leasing volume has recovered to within 5% of pre-pandemic levels, with tenants prioritizing high-quality, amenity-rich buildings. Rent growth remains modest at 1.7%, with premium assets outperforming while commodity suburban offices continue to face challenges.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 192M 15.9% $30.77 -170K 1.4M
4 & 5 STAR 68M 24.7% $36.17 78K 1M
3 STAR 89M 12.6% $29.00 -252K 379K
1 & 2 STAR 35M 7.1% $24.48 3K 0

INDUSTRIAL MARKET

The Phoenix industrial market is stabilizing after several years of unprecedented construction pushed vacancy higher. Vacancy has leveled at 10.7% as easing deliveries meet steady tenant demand, with 22.8 million SF of net absorption over the past year. However, elevated supply continues to weigh on performance, particularly for large logistics properties where availability remains high. Rent growth has moderated to 3.7% as tenants gain more options and sublease availability increases. While near-term conditions remain balanced, slowing deliveries should support gradual vacancy improvement and stronger rent growth over time.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 527M 10.7% $13.25 1.8M 22M
LOGISTICS 379M 12.6% $12.31 893K 14M
SPECIALIZED 117M 4.9% $14.71 985K 8.5M
FLEX 30M 9.4% $19.31 -108K 88K

MULTI-FAMILY MARKET

The Phoenix multifamily market continues showing signs of stabilization as strong renter demand begins absorbing recent supply additions. Net absorption reached 22,800 units over the past year, exceeding deliveries and helping vacancy improve to 11.1%. Despite improving conditions, elevated inventory continues to pressure operations, with asking rents down 1.5% year-over-year and concessions remaining common among newly delivered properties. The construction pipeline has declined significantly from peak levels, which should provide supply-side relief and support a gradual recovery toward stronger occupancy and rent growth in 2027.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION UNITS UNDER CONSTRUCT UNITS
TOTAL: 439K 11.1% $1,572 2.3K 17K
4 & 5 STAR 214K 12.0% $1,801 1.7K 13K
3 STAR 162K 10.6% $1,412 570 4K
1 & 2 STAR 64K 9.2% $1,120 78 55

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 supply. Vacancy remains tight at 4.8% despite increased store closures, while tenant demand generated 2.5 million SF of net absorption over the past year. Rent growth remains strong at 4.5%, ranking Phoenix among the nation’s top-performing retail markets. With most new construction occurring in high-growth suburban areas and limited speculative development, retail fundamentals are expected to remain healthy through 2027.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 248M 4.8% $27.19 -179K 2.5M
POWER CENTER 34M 4.4% $30.12 6K 356K
NEIGHBORHOOD CENTER 92M 5.9% $26.25 -55K 622K
GENERAL RETAIL 91M 3.8% $26.33 -154K 1.2M

Projects We Are Watching

March 2, 2026

The Projects I’m Watching Closely I get asked all the time, “What’s actually happening out there?” Short answer? A lot. Long answer? The Valley is evolving in real time. Industrial

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