It has been a long ten years, but the vacancy rate for the Phoenix retail market has returned to levels not recorded since 2008. As of the second quarter 2018 the vacancy rate is 7.8%. Compared to 2008 when the vacancy was 7.9%. This improvement is remarkable as our market still has a glut of vacant big boxes (spaces over 10,000 square feet), and an ever-growing retail base which now tops 175 million square feet of space. Absorption has been moderate, and for the first half of 2018 totaled over 850,000 square feet, which helped contribute to the lower vacancy.
“It has taken a decade to return to these pre-recession levels,” said Dave Cheatham, President of Velocity Retail Group. “The local economy is showing improvement in job growth, population increases, housing starts and lower unemployment. The improvement has been slow and steady, but we are now seeing the end of the recession’s grip on the Phoenix retail market” he added.
What is notable is that the vacancy rate in the Southeast Valley has improved 700 basis points from its 2011 high of 14.6%. Today, the vacancy in this region is 7.6%. Of the six regional areas all are in single digit vacancy with the Central region being the lone region that hovers in double-digits at 10.1%. The Central Region is also the region with the highest percentage of big box vacancy.
Velocity Retail’s research department tracks information on over 4,250 retail buildings totaling nearly 176 million square feet. The market is further analyzed in six regional trade areas giving a more complete picture of each area.
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