Phoenix retail real estate market levels off to close 2018

The renovations at Scottsdale Fashion Square show a mall willing to continue to provide the experiential retail experiences of the future, as malls across the nation close down, or renovate in hopes of attracting non-retail users. / Provided rendering by Scottsdale Fashion Square / AZBigMedia

 

AZBigMedia

The Greater Phoenix retail real estate market began 2018 with impressive sales and leasing but closed out the year with a relatively flat performance in fourth quarter.

Retail vacancy dropped 10 basis points during the fourth quarter to 7.3 percent.  The vacancy now rests 80 basis points below a year ago.  The rate has dropped each of the past eight quarters, though the improvement has leveled off a bit.

The city posted its weakest fourth quarter net absorption figures since 2015.  Net absorption for this traditionally strong quarter totaled 261,500 square feet.  Since 2010, tenants have created fourth quarter net absorption averaging 750,000 square feet.  Last year, fourth quarter net absorption topped 1.2 million square feet.  Despite the fourth quarter slowdown, the retail market accumulated nearly 2.1 million square feet of net absorption in 2018.  This makes 2018 the second strongest year for net absorption in the past five.

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