PHOENIX, ARIZONA -- The metro Phoenix retail vacanty increased to 8.0% at the end of Q4 2020, an increase of 20 basis points from the previous quarter. Year-over-year, the vacancy rate is steady. The retail market continues to tighten as new construction remains disciplines with 685,916-square-feet of product currently under construction.
Construction is led by grocery anchored and fitness center developments with Fry's and EOS Fitness active in the market. It is expected that retail construction will remain disciplines through the remainder of the current real estate cycle.
Despite the down year for brick-and -mortar shopping, the retail sector is hopeful for a big comeback in 2021. Many professionals are citing "revenge retail", while others are not so optimistic. Since the onset of the COVID-19 pandemic, many have been pushed to e-commerce which bodes well for the industrial sector. Conversations continue surrounding big box retail development into industrial, but those talks have not yet come to fruition in Phoenix to end 2020.
The rollout of the COVID-19 vaccine should continue to improve consumer sentiment and safety. Phoenix has the benefit of many open-air, suburban shopping centers,providing space to increase retail occupancy. The return to office should also benefit retail in 2021 and as Phoenix continues to grow its population base, retail should recover more quickly than most metros. However, national store closures will continue to impact the local market in the short-term.
FULL CBRE MARKET REPORT HERE: Phoenix Retail Q4 2020