Phoenix Retail Vacancy Remains at Historic Low Thanks to Strong Tenant Demand Article originally posted on Globe St. on October 17, 2025 Tenant demand is strong for retail in Phoenix — leading to a surge in rents and low vacancy. The market in the third quarter posted net absorption of +358,329 square feet, according to a report from CBRE. On a gross basis, absorption was 1.5 million square feet, marking the 20th straight quarter that the category exceeded one million square feet. The demand for space helped send the vacancy rate down by a modest 10 basis points from the previous three months to 5.1 percent. Vacancy now is 400 basis points below the long-term average of 9.1 percent. “Strong demographics, continued income growth and low unemployment fuel robust tenant demand. These strong demand drivers coupled with a modest development pipeline have kept retail vacancy historically low,” CBRE said. Deliveries saw a rise to 269,621 per square feet, while construction decreased to 1.23 million square feet, respectively. But overall, CBRE said that development costs have made it more challenging to start new speculative projects. “Overall, just over 160,000 sq. ft. broke ground during the third quarter,” it said, while adding, “Entering Q4 2025, nearly 89% of the development pipeline has already been preleased, which should help limit supply side pressure in the near-to-mid term in the Phoenix retail sector.” Asking rents were up by 2.6 percent from the previous three months and six percent year-over-year to reach $18.86 per square foot. Most notably, the Apache Junction submarket stood out with its resilient 16 percent surge on a quarterly basis. Target posted the top lease in Phoenix’s retail sector in the third quarter, with its 145,000 square foot signing. The big box chain was followed by Amped Fitness at 57,526 square feet and EOS Fitness at 43,723 square feet.