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 |