July 2026 – Knowing the Numbers In Commercial Real Estate
Office Market
The Phoenix office market continues to recover gradually as improving demand and accelerating demolitions reduce vacancy. Vacancy has improved to 15.8%, down from a 2024 peak of 17.1%, supported by 593,000 SF of positive net absorption and limited new supply. Leasing volume is now within 5% of pre-pandemic levels, with tenants favoring pre-built suites and amenity-rich buildings. Rent growth remains modest at 1.5%, with premium assets outperforming while older suburban offices continue to lag.
| SUB-MARKET | TOTAL SF AVAILABLE | VACANCY RATE | MARKET RENT | NET ABSORPTION SF | UNDER CONSTRUCT SF |
|---|---|---|---|---|---|
| TOTAL: | 192M | 15.8% | $30.68 | -117K | 1.4M |
| 4 & 5 STAR | 69M | 24.4% | $36.09 | 7K | 1M |
| 3 STAR | 89M | 12.5% | $28.90 | -127K | 329K |
| 1 & 2 STAR | 35M | 7.1% | $24.39 | 2K | 0 |
INDUSTRIAL MARKET
The Phoenix industrial market is stabilizing as easing deliveries meet steady tenant demand. Vacancy has improved to 10.5%, though it remains elevated after a historic construction surge. Net absorption reached 22.8 million SF over the past year, driven largely by logistics and advanced manufacturing users. However, 22.2 million SF remains under construction, keeping supply pressure in place. Rent growth has slowed to 3.1% as tenants gain more options, but slowing deliveries should support gradual vacancy improvement through 2026.
| SUB-MARKET | TOTAL SF AVAILABLE | VACANCY RATE | MARKET RENT | NET ABSORPTION SF | UNDER CONSTRUCT SF |
|---|---|---|---|---|---|
| TOTAL: | 523M | 10.5% | $13.16 | -252K | 22M |
| LOGISTICS | 376M | 12.3% | $12.21 | -88K | 13M |
| SPECIALIZED | 116M | 5.0% | $14.67 | -40K | 8.8M |
| FLEX | 31M | 9.7% | $19.09 | -123K | 88K |
MULTI-FAMILY MARKET
The Phoenix multifamily market is showing early signs of improvement as strong renter demand begins absorbing recent supply. Net absorption reached 21,391 units over the past year, slightly exceeding the 20,215 units delivered, helping vacancy improve to 11.4%. However, vacancy remains elevated and rent growth is still negative at -2.1%, with concessions common across new communities. The construction pipeline has dropped more than 50% from its peak, which should help supply pressure ease and support a gradual recovery into 2027.
| SUB-MARKET | TOTAL SF AVAILABLE | VACANCY RATE | MARKET RENT | NET ABSORPTION UNITS | UNDER CONSTRUCT UNITS |
|---|---|---|---|---|---|
| TOTAL: | 438K | 11.4% | $1,568 | -198 | 16K |
| 4 & 5 STAR | 215K | 12.5% | $1,793 | -44 | 13K |
| 3 STAR | 159K | 10.9% | $1,410 | -141 | 3K |
| 1 & 2 STAR | 64K | 9.3% | $1,109 | -13 | 55 |
RETAIL MARKET
The Phoenix retail market remains tight despite a modest rise in availability tied to store closures and bankruptcies. Vacancy is holding at 4.7%, while availability has increased to 5.0%, still well below historical averages. Tenant demand remains healthy, with 2.4 million SF of net absorption over the past year as off-price, dollar store, grocer, and experiential users backfill vacant space. Rent growth has moderated to 4.3% but remains among the strongest nationally. Limited construction should keep fundamentals strong.
| SUB-MARKET | TOTAL SF AVAILABLE | VACANCY RATE | MARKET RENT | NET ABSORPTION SF | UNDER CONSTRUCT SF |
|---|---|---|---|---|---|
| TOTAL: | 247M | 4.7% | $27.14 | -30K | 2.7M |
| POWER CENTER | 34M | 4.3% | $30.14 | -610 | 384K |
| NEIGHBORHOOD CENTER | 92M | 5.9% | $26.16 | -33K | 707K |
| GENERAL RETAIL | 90M | 3.6% | $26.12 | 520 | 1.2M |