By BEX Staff for AZBEX
Commercial real estate brokerage and research firm Kidder Mathews has released its Q4 2025 Phoenix market reports for several sectors.
Office
The company’s Office sector report shows year-over-year vacancy fell 140 basis points, decreasing to 23.6%.
Average rents held steady at $30.97/SF/year.
Net absorption was positive, hitting more than 211.5KSF for the quarter. Class A space contributed nearly 414KSF.
While leasing activity was strong, hitting 1.8MSF for the quarter and 6.4MSF for the year, sales transactions were down 18% and totaled 1.76MSF.
There were no new deliveries in Q4, as the production pipeline remained flat.
Industrial
With activity in the semiconductor space continuing to drive demand, Industrial activity remained strong despite encountering headwinds related to the rapid pace of construction across the sector in recent years.
Vacancy was up 20 bps for the year, reaching 13.5%.
Asking rents increased 6% YoY, climbing to $1.19/SF NNN, and leasing activity rose 3% YoY. Leasing for the year reached 27MSF, while Q4 activity was 4.3MSF.
Net absorption dropped 10% YoY to 13.9MSF, and deliveries plummeted 54% from 2024 to 15.8MSF as developers held back the pipeline to focus on absorbing existing space.
Retail
For all the doom and gloom forecasts about the future of Retail just a few years ago, the sector remains remarkably robust.
Metro Phoenix retail vacancy was unchanged YoY at 4.5%.
Asking rents rose 4.06% to reach $1.69/SF.
Most interestingly, space under construction surged upward by 21.3%, reaching a total of more than 3.29MSF. Q4 deliveries were 429.3KSF, and net absorption exploded, increasing 172.98% to 534.4KSF.
Multifamily
Following a multiyear builder rush in which new units were added at a pace meeting, and occasionally possibly exceeding, demand for the first time in years, Multifamily continued to soften as the cycle swings back toward equilibrium.
Vacancy climbed 80bps YoY to 12.6%, while average asking rents dipped 3% to $1,529/unit/month.
Units under construction fell 29% to reach a total of 18,021. Deliveries dropped 23% in Q4, for a total of 3,585, while net absorption also fell by 29% YoY.
Sales prices rose 10%, however, ending the year with an average/unit price of $231,699.