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 |