Source: Colliers International
The Greater Phoenix retail market continued its modest recovery during the third quarter. Net absorption was positive, driving the overall vacancy rate below 10 percent for the first time in years.
The tightening conditions are supporting rental rates, which rose again following an extended decline. Local retail conditions are improving even as some of the traditional drivers of retail space demand have expanded at more modest rates than in previous recoveries.
Local employment growth has lagged the 2014 pace to this point this year, and housing starts, while ahead of last year’s levels, remain just a fraction of historical figures.
Key takeaways from the report include:
- Retail vacancy in Greater Phoenix declined somewhat during the third quarter, dipping below 10 percent for the first time since 2008.
- With vacancy tightening, rents have begun to push higher. Metrowide average asking rents increased for the second straight quarter over the past three months, after declining steadily since 2007.
- The outlook for the remainder of 2015 is favorable, with some positive momentum already present in the market and the traditional boost from the holiday shopping season likely to provide an additional increase to net absorption.
- Sales of shopping centers spiked in the third quarter, following a lull in the second quarter. The median price edged down a bit, while cap rates compressed slightly. With market fundamentals improving, the investment climate for shopping centers should strengthen in the coming quarters.
Read more of the Colliers International Greater Phoenix Retail 3Q 2015 report.