right-arrowCreated with Sketch. Contact us

October 2025 – Knowing the Numbers In Commercial Real Estate

Office Market

The Phoenix office market is showing early signs of recovery. Vacancy has flattened at 16.3% following three straight quarters of positive net absorption totaling 900K SF. Demand is strongest for premium space in top submarkets, while older and suburban properties continue to struggle. New deliveries are limited, which is helping stabilize the market. Rent growth sits at 3.0%, but generous tenant improvement (TI) packages are compressing effective rents. Some obsolete buildings are being redeveloped or repurposed for industrial use. Recovery is expected to be slow and uneven across asset classes.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 195M 16.3% $30.09 -89K 1.3M
4 & 5 STAR 70M 25.6% $34.58 -54K 509K
3 STAR 89M 12.7% $28.99 -43K 751K
1 & 2 STAR 36M 7.1% $23.97 7K 0

INDUSTRIAL MARKET

Phoenix’s industrial market continues its rebalancing act, with vacancy rising slightly to 12.5% due to ongoing deliveries. Demand remains healthy, led by logistics and manufacturing users, resulting in over 15.5M SF of net absorption over the past 12 months. Construction has tapered, and developers have pulled back on speculative builds. Rent growth is flat at 0.0% year-over-year, down sharply from post-pandemic highs. Smaller bay and infill product continues to outperform large-scale logistics sites. Long-term fundamentals are intact, with Phoenix’s location, workforce, and infrastructure supporting demand even as the market normalizes.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 508M 12.4% $12.85 780K 21M
LOGISTICS 371M 14.7% $11.92 585K 12M
SPECIALIZED 105M 5.3% $14.17 235K 8M
FLEX 32M 8.4% $19.15 -40K 634K

MULTI-FAMILY MARKET

Phoenix’s multifamily sector remains under pressure from elevated vacancy, now at 11.5%, though down from recent highs. Deliveries continue at a strong pace, with nearly 19,000 units added over 12 months, outpacing absorption. Rents have declined by 1.1% year-over-year, but pricing trends have improved from earlier lows. High concessions persist in Class A assets, while more affordable properties remain stable. New starts have dropped sharply, signaling a likely recovery in 2026 as supply moderates. Strong demographic trends continue to underpin long-term demand, even as short-term softness lingers.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION UNITS UNDER CONSTRUCT UNITS
TOTAL: 425K 12.3% $1,563 440 20K
4 & 5 STAR 210K 13.6% $1,772 340 15K
3 STAR 152K 11.5% $1,404 106 5K
1 & 2 STAR 63K 9.8% $1,161 -6 0

RETAIL MARKET

Phoenix’s retail market remains fundamentally strong despite a rise in store closures that pushed the availability rate to 4.9%. Demand remains robust, supported by low unemployment, rising incomes, and strong population growth. Big-box vacancies from national bankruptcies are being backfilled by off-price and experiential tenants, including T.J. Maxx, Aldi, and pickleball operators. Construction remains modest, limiting supply-side pressure. Rent growth has slowed to 4.4%, still outperforming the national average. Despite potential economic headwinds, tight inventory and strong demographic momentum suggest continued market stability.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 244M 4.7% $26.34 -1M 2.4M
POWER CENTER 33M 5.0% $29.07 -68K 37K
NEIGHBORHOOD CENTER 92M 5.9% $25.50 -41K 491K
GENERAL RETAIL 88M 3.1% $25.45 23K 1.2M

10 CRE Projects to Watch in 2025!

March 3, 2025

As we step into 2025, Arizona’s commercial real estate market is buzzing with groundbreaking developments that are set to redefine communities across the state. Here are 10 standout projects shaping

Learn More »
Facebook X-twitter Instagram Linkedin
NAVIGATION
NAVIGATION
  • 71563 The Ridgeway, Fannie land, Delaware - 80608
  • info@youremailaddress.com
  • 123-456-4890
Subscribe to hani's news letter
SERVICES
CONTACT
Subscribe to Hani's Newsletter
© 2025 SOLEX CRE. All Rights Reserved. | Privacy Policy | Terms and Conditions
Facebook X-twitter Instagram Linkedin
©2025 SOLEX CRE. All Rights Reserved. | Privacy Policy | Terms and Conditions