Phoenix Retail Shows Resilience Despite Q4 Negative Absorption
Phoenix's retail market is continuing to show strength, according to the latest report from CBRE. That comes even as net absorption hit the negative territory in the last three months of the year at -275,194 square feet.
"Store closures from retailers such as 99 Cent Only, Conn’s Home Plus and Big Lots added several big box spaces to the market that have yet to be backfilled," CBRE said in an explanation of the negative absorption.
Plus, it added "Vacancy increased by 20 bps quarter-over-quarter to 5.7%, as a result."
However, that wasn't enough to stop rent growth. Average prices hit $18.25 per square foot in the fourth quarter, a 2.6 percent rise from the previous three months and 7.3 percent year-over-year. The South Mountain region experienced the highest increases at 7.9 percent to $20.79 per square foot.
Also, gross absorption hit 1.1 million square feet, marking the 18th straight quarter the figure has been above a million, according to CBRE. Some of the top leasing deals in the last three months of the year included Urban Air's 44,191 square feet, followed by Burlington's 32,023, and Physiq's 32,306 square feet.
While the availability rate went up 30 basis points to 5.7 percent, it was still nearly half of the market's long-term average of 10.1 percent. That came as construction slowed down to 1.07 million square feet.
"Supply additions have been modest in this recent expansion cycle, as elevated debt, land and construction costs have made it much more difficult for new speculative projects to pencil," CBRE said.
Source: GlobeSt/ALM