The following reflects Phoenix retail market conditions as of 3Q 2026.
The Phoenix retail market in 3Q 2026 experienced falling vacancy, rising asking rents, higher unemployment, and a slower pace of construction activity. Explore our full Phoenix retail market report for deeper insights into leasing activity, investment sales, and submarket performance.
Frequently Asked Questions
What is the retail vacancy rate in Phoenix in 3Q 2026?
The Phoenix retail vacancy rate was 4.4% in 3Q 2026, according to Kidder Mathews research. This was unchanged from 2Q 2026 and down 10 basis points from 4.5% in 3Q 2025, reflecting continued tightening in the market year over year.
What are average asking rents for Phoenix retail space in 3Q 2026?
Average asking retail rents in Phoenix were $1.77 per square foot per month in 3Q 2026 (Data source: CoStar). That is up from $1.78 in 2Q 2026 and up 6.17% from $1.66 in 3Q 2025, as landlords continued to push rates higher amid limited vacancy.
How much retail net absorption did Phoenix record in 3Q 2026?
Phoenix retail net absorption totaled 174,888 square feet in 3Q 2026, according to Kidder Mathews research. Net absorption measures the change in physically occupied space, so a positive figure means tenants took more space than they vacated. Year-to-date 2026 net absorption stands at 1,749,505 square feet, down 3.03% from 1,804,121 square feet over the same period in 2025.
How much retail space is under construction in Phoenix?
There were 2,553,137 square feet of retail space under construction in Phoenix as of 3Q 2026 (Data source: CoStar), down 19.91% from 3,187,974 square feet a year earlier. Notable projects underway include Medina Station (333,505 SF) and NEC Signal Butte & Rt 60 (300,000 SF), both in the Red Mountain/Mesa submarket, with deliveries expected in 4Q 2027.
How much retail space was delivered in Phoenix in 3Q 2026?
Phoenix retail construction deliveries totaled 236,286 square feet in 3Q 2026, according to Kidder Mathews research. Year-to-date 2026 deliveries reached 2,340,471 square feet, up 14.88% from 2,037,250 square feet delivered over the same period in 2025.
What was the largest retail sale transaction in Phoenix in 3Q 2026?
The largest retail sale in Phoenix in 3Q 2026 was 1421 S Signal Butte Rd in the Red Mountain/Mesa submarket, an 82,300-square-foot property that sold for $22,037,566 ($267.77 per square foot), according to Kidder Mathews research. NS Retail Holdings, LLC purchased the property from SimonCRE Buddy, LLC.
What was the largest retail lease signed in Phoenix in 3Q 2026?
The largest retail lease signed in Phoenix in 3Q 2026 was Safeway’s 64,000-square-foot lease at The Residences at The Gilmore in the South Gilbert submarket, according to Kidder Mathews research, with the transaction dated August 2026.
What is the average cap rate for Phoenix retail properties in 3Q 2026?
The average cap rate for Phoenix retail properties was 6.3% in 3Q 2026 (Data source: CoStar), down 80 basis points from 7.1% in 3Q 2025 and down from 6.5% in 2Q 2026, reflecting continued investor demand for retail assets in the market.
What is the average retail sale price per square foot in Phoenix?
The average retail sale price in Phoenix was $261 per square foot in 3Q 2026, according to Kidder Mathews research. That is up 17.42% from $223 per square foot in 3Q 2025, though down from $296 per square foot in 2Q 2026.
What is the outlook for the Phoenix retail market heading into late 2026?
The Phoenix retail market enters late 2026 with vacancy near historic lows at 4.4% and asking rents continuing to rise year over year, according to Kidder Mathews research. With under-construction supply down nearly 20% year over year, limited new inventory is expected to keep supporting rent growth and investor demand in the near term.
Last updated: 3Q 2026. Data source: CoStar. Compiled by the Kidder Mathews Research Group.
3Q 2026 Phoenix Retail Market: Key Data Points
Explore our full Phoenix retail market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Vacancy Rate: Retail vacancy in Phoenix held at 4.4% in 3Q 2026, down 10 basis points from 4.5% a year earlier.
- Average Asking Rents: Average asking rents reached $1.77/SF/month in 3Q 2026, up 6.17% year over year from $1.66/SF/month.
- Net Absorption: Net absorption totaled 174,888 SF in 3Q 2026, bringing year-to-date 2026 absorption to 1,749,505 SF, down 3.03% from the same period in 2025.
- Construction Pipeline: 2,553,137 SF of retail space was under construction as of 3Q 2026, down 19.91% year over year, while 236,286 SF was delivered during the quarter.
- Investment Activity: The average retail sale price reached $261/SF in 3Q 2026, up 17.42% year over year, while the average cap rate compressed to 6.3%, down 80 basis points from 3Q 2025.
- Largest Sale: 1421 S Signal Butte Rd in Red Mountain/Mesa sold for $22,037,566 ($267.77/SF), the largest retail sale transaction of the quarter.
- Largest Lease: Safeway signed the quarter’s largest lease at 64,000 SF at The Residences at The Gilmore in South Gilbert.
Market Breakdown — Quarterly Comparison
| Metric | 3Q26 | 2Q26 | 3Q25 | YOY Change |
|---|---|---|---|---|
| Vacancy Rate | 4.4% | 4.4% | 4.5% | -10 bps |
| Average Asking Rents/SF/Mo | $1.77 | $1.78 | $1.66 | 6.17% |
| Under Construction (SF) | 2,553,137 | 2,701,288 | 3,187,974 | -19.91% |
| Average Sales Price/SF | $261 | $296 | $223 | 17.42% |
| Average Cap Rate | 6.3% | 6.5% | 7.1% | -80 bps |
Market Breakdown — Year-to-Date Comparison
| Metric | 3Q26 | 2026 YTD | 2025 YTD | YOY Change |
|---|---|---|---|---|
| Construction Deliveries (SF) | 236,286 | 2,340,471 | 2,037,250 | 14.88% |
| Net Absorption (SF) | 174,888 | 1,749,505 | 1,804,121 | -3.03% |
Significant Sale Transactions 3Q 2026
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| 1421 S Signal Butte Rd | Red Mountain/Mesa | 82,300 | $22,037,566 | $267.77 | NS Retail Holdings, LLC | SimonCRE Buddy, LLC |
| Mesa Commons | Red Mountain/Mesa | 129,315 | $19,500,000 | $150.79 | Plaza West, LLC | Schneider Living Trust |
| Plaza Del Sol | West Phoenix/Maryvale | 141,659 | $14,189,292 | $100.17 | Costco Wholesale Corp. | Kimco Realty Corp. |
Significant Lease Transactions 3Q 2026
| Property | Submarket | SF | Transaction Date | Tenant |
|---|---|---|---|---|
| The Residences at The Gilmore | South Gilbert | 64,000 | August 2026 | Safeway |
| Mack Innovation Park Scottsdale | Scottsdale/Salt River | 31,344 | July 2026 | Fitlab Az |
| Greenway Plaza | Ctrl Peoria/Arrowhead | 27,957 | July 2026 | Goodwill |
Significant Under Construction
| Property | Submarket | SF | Delivery |
|---|---|---|---|
| Medina Station | Red Mountain/Mesa | 333,505 | 4Q 2027 |
| NEC Signal Butte & Rt 60 | Red Mountain/Mesa | 300,000 | 4Q 2027 |
| Signal Butte & Williams Field Rd | Gateway Airport | 250,000 | 4Q 2027 |
Data as of 3Q 2026. Source: CoStar. Prepared by the Kidder Mathews Research Group.
ContactGARY BARAGONA |
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