Retail Leasing Gains Strength in Phoenix, Driving Vacancy Rate to Record Low

The Phoenix retail real estate market in the third quarter of 2023 is the most competitive it has ever been, with the lowest recorded vacancy rate at 5.1%. Grocery stores and fitness centers have been leading the surge in demand for retail space, filling larger spaces in malls and mixed-use developments at higher rates than before the pandemic. Retail leasing remains strong despite economic challenges. Rental rates have increased, with the average rent per square foot rising from $21.21 in Q2 to $23.91 in Q3. While there is strong demand in the Valley, limited available space has created intense competition for leases. Large retail projects under construction may lead to a softening of rental rates in the future.

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