Phoenix Retail Market Report

The following reflects Phoenix retail market conditions as of Q2 2026.

The Phoenix retail market in 2Q 2026 remained healthy, with vacancy holding below 5% and asking rents continuing to rise. Strong market fundamentals supported increases in both construction activity and investment pricing, while net absorption moderated from the elevated levels seen a year ago and development deliveries slowed. Explore our full Phoenix retail market review for detailed insights into leasing activity, construction trends, and investment performance.

Frequently Asked Questions

What is the current retail vacancy rate in Phoenix?

Phoenix retail vacancy measured 4.5% in Q2 2026, according to Kidder Mathews research. This represents a slight increase of 10 basis points from 4.4% recorded in Q2 2025, reflecting a still-tight retail market. (Data source: CoStar)

What are average asking rents for retail space in Phoenix in Q2 2026?

Average asking rents for Phoenix retail space reached $1.78 per square foot per month in Q2 2026, according to Kidder Mathews research. This marks a 9.37% increase from $1.63 PSF/mo one year earlier in Q2 2025, continuing a steady upward trend from $1.73 PSF/mo the previous quarter. (Data source: CoStar)

How much net absorption has the Phoenix retail market recorded in 2026?

Phoenix retail net absorption totaled 590,640 SF year-to-date through Q2 2026, according to Kidder Mathews research. Net absorption measures the change in occupied space over a period, and while still positive, this figure is down 62.23% from the 1,563,595 SF absorbed over the same period in 2025; Q2 2026 alone accounted for 143,184 SF of that total. (Data source: CoStar)

How much retail space is currently under construction in Phoenix?

Phoenix had 3,287,703 SF of retail space under construction as of Q2 2026, according to Kidder Mathews research. This is an 11.50% increase from 2,948,661 SF under construction in Q2 2025, though slightly below the 3,342,654 SF recorded the prior quarter. (Data source: CoStar)

How much new retail construction was delivered in Phoenix in Q2 2026?

Phoenix retail construction deliveries totaled 422,399 SF in Q2 2026, according to Kidder Mathews research. Year-to-date deliveries reached 1,293,336 SF, down 9.75% compared with 1,433,137 SF delivered over the same period in 2025. (Data source: CoStar)

What is happening with retail investment sale prices and cap rates in Phoenix?

Average retail sale prices in Phoenix rose to $296 per square foot in Q2 2026, a 20.51% increase from $246 PSF in Q2 2025, according to Kidder Mathews research. Average cap rates expanded to 6.5%, up 40 basis points from 6.1% one year earlier. (Data source: CoStar)

What was the largest retail sale transaction in Phoenix in Q2 2026?

The largest retail sale transaction in Phoenix in Q2 2026 was the sale of Goodwill in South Buckeye, a 25,000-square-foot property that sold for $18,305,401, or $732.22 per square foot, according to Kidder Mathews research. Abi Properties Inc purchased the property from SimonCRE Summit III, LLC. (Data source: CoStar)

What was the largest retail lease transaction in Phoenix in Q2 2026?

The largest retail lease transaction in Phoenix in Q2 2026 was Tractor Supply Company’s 45,593-square-foot lease at Glendale Market Square in the Central Peoria/Arrowhead submarket, signed in May 2026, according to Kidder Mathews research. Other notable leases included SanTan Village Marketplace in Gilbert (35,399 SF) and Bethany Marketplace in the North Phoenix/I-17 Corridor submarket (31,617 SF). (Data source: CoStar)

What retail properties are currently under construction in Phoenix?

The largest retail development currently under construction in Phoenix is Medina Station in the Red Mountain/Mesa submarket, a 333,505-square-foot project slated for delivery in Q4 2027, according to Kidder Mathews research. Other significant projects include NEC Signal Butte & Rt 60 (300,000 SF), also in Red Mountain/Mesa, and a 250,000-square-foot project at Signal Butte & Williams Field Rd in the Gateway Airport submarket. (Data source: CoStar)

What is the outlook for the Phoenix retail market?

The Phoenix retail market remains healthy heading into the second half of 2026, with vacancy holding below 5% and asking rents continuing to climb, according to Kidder Mathews research. Strong fundamentals are supporting increased construction and investment activity, though net absorption and construction deliveries have both moderated compared with the elevated pace recorded a year earlier. (Data source: CoStar)

Last updated: Q2 2026. Data source: CoStar. Compiled by the Kidder Mathews Research Group.

Q2 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 Remains Tight: Phoenix retail vacancy measured 4.5% in 2Q 2026, up just 10 basis points from 4.4% one year ago.
• Asking Rents Continue to Climb: Average asking rents reached $1.78 PSF per month, a 9.4% increase year-over-year from $1.63 PSF.
• Development Pipeline Expands: Retail space under construction totaled 3.29 million SF, up 11.5% from 2.95 million SF a year earlier.
• Investment Values Increase: Average retail sale prices rose to $296 PSF, a 20.5% year-over-year increase, while average cap rates expanded to 6.5%.
• Construction Deliveries Slow: YTD construction deliveries reached 1.29 million SF, down 9.8% compared with the same period in 2025.
• Net Absorption Remains Positive: YTD net absorption totaled 590,640 SF, demonstrating continued tenant demand despite moderating from the exceptionally strong pace recorded one year earlier.

Market Breakdown — Quarterly Comparison

Market Breakdown — YTD Comparison

Significant Sale Transactions 2Q 2026

Significant Lease Transactions 2Q 2026

Significant Under Construction

Data as of Q2 2026. Source: CoStar. Prepared by the Kidder Mathews Research Group.