right-arrowCreated with Sketch. Contact us

September 2026 – Knowing the Numbers In Commercial Real Estate

Office Market

The Phoenix office market continues its gradual recovery as improving tenant demand and accelerating demolitions reduce excess inventory. Vacancy has improved from a 17.1% peak in 2024 to 15.8%, while the market recorded 67,100 SF of net absorption over the past year. Leasing activity reached 9.5 million SF, within 9% of pre-pandemic levels, with tenants favoring high-quality, amenity-rich buildings. Asking rents grew 1.6%, while virtually no speculative development and continued removal of obsolete offices should support further stabilization.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 192M 15.8% $30.98 199K 1.4M
4 & 5 STAR 68M 24.6% $36.80 146K 1MK
3 STAR 89M 12.4% $28.98 -17K 379K
1 & 2 STAR 35M 7.2% $24.51 71K 0

INDUSTRIAL MARKET

The Phoenix industrial market’s recovery accelerated as strong tenant demand outpaced new supply. Net absorption reached 23.6 million SF over the past year compared with 15.8 million SF of deliveries, helping vacancy improve from 12.2% a year ago to 10.4%. Logistics, advanced manufacturing, semiconductor, and data center users continue driving demand, while asking rents increased 3.4%. With annual deliveries slowing substantially from recent record levels, conditions should continue improving, although excess mid-sized warehouse inventory could keep the decline in vacancy gradual through 2027.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 528M 10.4% $13.24 4.6M 22M
LOGISTICS 380M 12.1% $12.28 3.3M 13M
SPECIALIZED 118M 5.1% $14.72 1.4M 8.1M
FLEX 31M 9.7% $19.33 -164K 88K

MULTI-FAMILY MARKET

The Phoenix multifamily market is showing stronger signs of recovery as renter demand begins outpacing new supply. Net absorption reached 23,332 units over the past year compared with 18,377 units delivered, helping vacancy improve from its 12.6% peak to 10.8%. Rent growth remains negative at -1.1%, and concessions are still common as the market works through recent supply. However, the construction pipeline has fallen more than 50% from its peak, providing supply-side relief and improving the outlook for occupancy and eventual positive rent growth.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION UNITS UNDER CONSTRUCT UNITS
TOTAL: 440K 10.8% $1,572 4.2K 16K
4 & 5 STAR 212K 11.2% $1,804 3.2K 12K
3 STAR 164K 10.8% $1,411 887 4K
1 & 2 STAR 65K 9.1% $1,128 107 55

RETAIL MARKET

The Phoenix retail market remains fundamentally tight despite a modest increase in space availability from recent store closures. Vacancy is holding at 4.7%, while 2.7 million SF of net absorption over the past year reflects healthy demand from expanding retailers. Asking rents increased 4.6%, placing Phoenix among the nation’s top major markets for rent growth. With roughly 3 million SF delivered and the construction pipeline remaining modest and largely committed, limited supply and continued demographic demand should keep vacancy compressed and support healthy retail fundamentals through 2027.

SUB-MARKET TOTAL SF AVAILABLE VACANCY RATE MARKET RENT NET ABSORPTION SF UNDER CONSTRUCT SF
TOTAL: 248M 4.7% $27.26 151K 2.5M
POWER CENTER 34M 3.7% $30.11 231K 356K
NEIGHBORHOOD CENTER 92M 6.0% $26.25 -61K 611K
GENERAL RETAIL 91M 3.7% $26.51 -66K 1.2M