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Regional Summaries

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Phoenix, AZ

Apartment
The strength of the Phoenix area apartment market is readily apparent in the data. Not only has the vacancy rate remained below 5.0% since late 2014—indeed, it’s barely moved from 4.5% since early 2015—but it has done so at a time of high construction completion totals. Reis put fourth quarter 2016 overall metro area vacancy at 4.5%, up 30 basis points for the period but down 10 for the year. At $932 and $860 per month, asking and effective averages for the quarter represented gains of fully 5.6% and 5.7% for the year. Gains in the fourth quarter alone were 0.6% and 0.5%. VIEW APARTMENT LISTINGS >
Industrial
The Phoenix area warehouse/distribution space market accounts for 139 million square feet. Vacancy, here, has been declining across the board amid strengthening rent growth. Vacancy in the warehouse/distribution market, Phoenix’s most dynamic, ended the fourth quarter of 2016 at 15.6%, down 20 basis points for the period and down 60 for the year amid the most active period for construction completions since the recession. An additional 10 basis points were subtracted in January 2017. At $5.75 psf and $5.25 psf, fourth quarter 2016 average asking and effective rents for warehouse/distribution space were up 2.5% and 2.9% for the year. Respective gains in the fourth quarter alone were 0.5% and 0.8%, to which January added increases of 0.2% to both. Phoenix’s large high-tech industry base, rooted in the East Valley, has given rise to a substantial Flex/R&D real estate sector. Reis counts total inventory at 31.4 million square feet. Vacancy in the local Flex/R&D space market, also elevated, is declining as well—and more dramatically. The fourth quarter 2016 rate was 18.7%, down fully 60 basis points for the period even with a large addition to supply, and was down 190 for the year. The Flex/R&D market also performs favorably. At $10.65 psf and $9.48 psf, fourth quarter average asking and effective rates were up 1.7% and 1.9% year-over-year. Growth rates for the fourth quarter of 2016 alone were 0.5% for both rates, to which January brought no change. VIEW INDUSTRIAL LISTINGS >
Office
Phoenix’s general purpose, multi-tenant office market fourth quarter 2016 vacancy rate was 23.8%, down 40 basis points for the period and down 60 for the year following 2015’s 100-basis-points loss. An additional 10 basis points were shed in January 2017. At $24.80 psf and $19.33 psf, respective average asking and effective rates in the fourth quarter of 2016 represented gains of 3.8% and 4.0% for the year, up from the increases of 2.8% and 2.9% seen in 2015 and the highest rates of growth reported by Reis for this market since 2007. January 2017 added a few cents to the asking average for a gain of 0.1%. VIEW OFFICE LISTINGS >
Retail
The Phoenix community-neighborhood shopping center vacancy rate was 10.1% at year-end 2016, unchanged since the third quarter but down 50 basis points for the year. January 2017 followed with the loss of 10 additional points. At $19.98 psf and $17.13 psf, asking and effective averages in the fourth quarter of 2016 were up 1.2% and 1.3% for the year. Gains for the fourth quarter alone were 0.6% and 0.5% (to which January 2017 added increases of 0.1%). VIEW RETAIL LISTINGS >

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Source: Data provided by Reis, inc.

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