Phoenix Metropolitan retail recorded positive net absorption for the third straight quarter as recorded in statistics just released by Velocity Retail Group through June 30, 2012. This is the first positive absorption recorded since before the “Great Recession” in November of 2008. After 12 consecutive quarters of negative absorption, the last three quarters of positive absorption signal a healing that has begun and shows that we are well on our way to a solid recovery.
Dave Cheatham, managing principal of Velocity Retail Group commented on this positive trend, saying, “Since late 2011 we have been seeing an up-tick in retailer activity. National tenants are exploring their expansion opportunities, value oriented retailers have been taking advantage of the big box spaces that have been vacant, and local and regional tenants are opening new stores.
“Landlords are figuring out how to structure deals with quality tenants, and fill those empty spaces,” said Cheatham. “Whether it’s a combination of free rent, additional build-out monies, or favorable rent structures for the first few years, they’re getting it done.”
Michael Clark, vice president at Velocity, states, “There is over 1.2 million square feet of net absorption through the second quarter of 2012. The Phoenix retail market has not seen annual positive absorption since 2008. The overall vacancy rate for Metropolitan Phoenix has been showing consistent improvement in the past year with a recorded decline of over one percentage point in the past year. This is extremely good news.”
Velocity Retail reports second quarter of 2012 ended with a vacancy rate of 12.2%. Just one year ago, in the second quarter of 2011, the vacancy rate was 13.4% which is an improvement of 1.2% in this twelve month period.
Velocity Retail Group sees a favorable outlook for the Commercial Retail market for 2012. With improved tenant activity from national and local retailers, and some of the obsolete retail spaces being absorbed by non-retail uses (such as schools, medical facilities or call centers), the vacancy rate should continue improve and by mid-2013 be between 9.9% and 10.5%.