Following rather stagnant activity last quarter, Phoenix retail metrics accelerated in Q4 2017 to close out the year on a positive note. Year-end net absorption was 1,601,498 sq. ft., causing marketwide vacancy to decrease 80 basis points (bps) year-over-year to 8.1%.
New supply continues to stay well below prerecession levels, bolstering market fundamentals. The combination of significant preleased construction and the repurposing of outdated retail space has pulled down the vacancy rate in the fourth quarter of 2017 to its lowest level since 2008.
The Phoenix retail market registered 561,509 sq. ft. of net absorption and 1,285,870 sq. ft. of gross absorption in the fourth quarter.
In the fourth quarter of 2017, the marketwide vacancy rate fell 20 basis points (bps) quarter-over-quarter and 80 bps year-over-year to 8.1%. Notably, this marks the sixth consecutive quarterly decrease in the marketwide vacancy rate.
The Phoenix retail market’s average asking lease rate ended Q4 2017 at $17.31 per sq. ft. (NNN). Over the past 12-month period, average asking rent edged up 1.0%. Notably, the average asking lease rate is 14.1% above the recessionary low in 2013.
The Phoenix retail market ended 2017 on a high note and momentum is expected to continue into 2018. Big box users were particularly active at the end of 2017 and this demand will allow for vacant big box space to fill throughout 2018.