Absorption of retail real estate in Greater Phoenix slowed during the second quarter, but investors were busy purchasing retail properties. The mid-year retail research report released by Colliers International in Greater Phoenix forecasts improvement in the retail sector for the second half of 2017.
Vacancy remained flat at 9.3 percent in the second quarter and net absorption decreased. The past three months was the lowest quarter in more than two years for retail absorption with just more than 175,000 square feet posted for the three months. Net absorption for the first half was approximately 858,000 square feet, down by seven percent from the first half of 2016. The first quarter posted a strong level of retail tenant move-ins, but second quarter activity fell off. Despite the slowdown, the market is expected to keep pace with its running four-year average of two million square feet of net absorption per year. As the remainder of the year unfolds, the East Valley is expected to continue its strong performance. That submarket holds approximately 30 percent of the total retail inventory. The East Valley’s vacancy rate dipped below 10 percent during the second quarter for the first time in nearly a decade