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June 2026 – Knowing the Numbers In Commercial Real Estate

Office Market

The Phoenix office market continues its gradual recovery as tenant demand improves and new construction remains limited. Leasing activity has strengthened across premier submarkets including Tempe, Scottsdale, and the Camelback Corridor, while older commodity office properties continue to face elevated vacancy and slower absorption. Employers are increasingly prioritizing high-quality, amenity-rich workplaces, creating a bifurcated market between top-tier assets and aging inventory. With very little speculative construction underway and several obsolete buildings being repurposed or removed from inventory, long-term supply pressures remain muted, supporting a steady path toward stabilization.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 192M 16.1% $30.54 586K 1M
4 & 5 STAR 69M 25.1% $35.93 323K 601K
3 STAR 89M 12.6% $28.72 229K 399K
1 & 2 STAR 35M 7.0% $24.40 34K 0

INDUSTRIAL MARKET

The Phoenix industrial market continues transitioning from the rapid expansion cycle of recent years into a more balanced environment. Demand remains supported by logistics, advanced manufacturing, semiconductor suppliers, and distribution users attracted by the region’s strategic location and business-friendly environment. Major investments from companies such as TSMC and related supply-chain operators continue to reinforce Phoenix’s position as one of the nation’s leading industrial growth markets. While vacancy has risen modestly due to elevated deliveries, leasing activity remains healthy and long-term fundamentals continue to benefit from population growth, reshoring initiatives, and infrastructure investment throughout the Southwest.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 521M 11.0% $13.16 2.8M 22M
LOGISTICS 376M 13.0% $12.24 2.5M 12M
SPECIALIZED 115M 5.0% $14.53 177K 9.3M
FLEX 30M 9.3% $19.37 124K 174K

MULTI-FAMILY MARKET

The Phoenix multifamily market is showing early signs of stabilization as record renter demand begins to absorb the substantial wave of new apartment deliveries completed over the past several years. Net absorption reached more than 20,000 units over the last 12 months, matching the nearly 20,000 units delivered during the same period and helping vacancy improve to 11.7%. Despite stronger leasing activity, elevated supply continues to pressure rent growth, with asking rents declining 2.4% year-over-year and concessions remaining common across many newly delivered communities. Construction activity has slowed significantly from peak levels, which should gradually reduce supply pressure and position the market for stronger performance in 2027 and beyond.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION UNITS UNDER CONSTRUCT UNITS
TOTAL: 436K 11.7% $1,567 3,562 17K
4 & 5 STAR 215K 12.9% $1,791 2,397 14K
3 STAR 158K 11.0% $1,407 1,064 4K
1 & 2 STAR 63K 9.3% $1,105 101 55

RETAIL MARKET

Phoenix retail fundamentals remain among the strongest in the country, supported by sustained population growth, rising household incomes, and limited available space. Vacancy remains exceptionally tight at approximately 4.7%, while asking rents increased 4.9% over the past year, continuing to rank Phoenix among the nation’s top-performing retail markets. Although some national retailer bankruptcies and store closures have created isolated vacancies, strong tenant demand from grocers, off-price retailers, restaurants, and experiential concepts has quickly backfilled many locations. With only a modest construction pipeline and most new projects substantially preleased, 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: 246M 4.7% $27.15 105K 3M
POWER CENTER 34M 4.3% $30.07 120K 393K
NEIGHBORHOOD CENTER 92M 6.1% $26.29 -212K 711K
GENERAL RETAIL 90M 3.5% $26.16 172K 1.4M