Phoenix Retail Market Heats Up as Leasing Surges in 2024
The Phoenix retail scene is buzzing. Leasing activity is ramping up in a big way, thanks to persistent demand and a welcome boost in available spaces for lease.
In the second and third quarters of 2024, we saw an impressive average of 2.2 million square feet of retail space leased - marking the best performance since way back in early 2014. That’s a serious win for the market.
But let’s rewind for a moment. Over the past few years, tenant demand has been sky-high, but a lack of available space kept things in check. After all, you can’t lease what doesn’t exist! Post-COVID, for-lease inventory hit rock-bottom, leaving retailers scrambling for options. And with speculative construction at a crawl and older spaces in less-than-ideal locations dominating the market, expanding businesses found it tough to grow.
Now, things are starting to shift. A recent uptick in store closures has opened up opportunities for new tenants to step in and grow their footprints. For instance, Dollar Tree snagged around a dozen leases totaling over 250,000 square feet in Q2 and Q3. A big chunk of that space came from former 99 Cents Only stores, which became available after the chain’s bankruptcy filing in April.
The picture gets even brighter when you add new retail developments into the mix. Buckeye, one of the Valley’s fastest-growing areas, is welcoming not one but two massive retail centers.
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And let’s not forget the major redevelopments at PV Mall, Metrocenter, and Fiesta Mall—all adding even more options for growing retailers.
Looking ahead, the competition for retail space in Phoenix will stay fierce. The city’s strong population growth and economic momentum are driving consumption, which in turn keeps retailers hungry for space. In fact, the median time it takes to lease a retail spot has dropped to just 6.4 months - the lowest it’s been in 15 years!
The big question moving forward isn’t about demand - it’s about supply. If more retail space hits the market in 2025, either through new construction or store closures, there’s no shortage of tenants ready to pounce. With a strong roster of potential backfill tenants in place, leasing activity should stay elevated.
In short, it’s an exciting time for Phoenix retail. Keep an eye on this market - it’s showing no signs of slowing down anytime soon.
Source: CoStar