Darren Pitts is executive vice president of Velocity Retail Group.
Velocity Retail Group: Phoenix retail market improves
For the first half of 2017, the retail market in Phoenix has recorded continued improvement in both vacancy and leasing activity (absorption). The current overall vacancy rate is 9.3 percent, with all but one of the regional trade areas with single-digit vacancy, according to a report fromVelocity Retail Group.
Leasing activity for the first two quarters is nearly 900,000 square feet. This pace will be on track to finish 2017 with nearly 2 million square feet of space leased, which is nearly double that of 2014 and 2015. Strong leasing activity and little speculative new construction are bringing the vacancy rate down. Five years ago, the vacancy rate was 200 basis points higher at 11.3 percent.
Currently, there are more than 600,000 square feet of retail buildings under construction, with nearly 350,000 already delivered in 2017.
In looking ahead for the second half of 2017, experts atVelocity Retail Group foresee continued improvement in the vacancy rate, with 4th quarter 2017 finishing at 8.9 percent. Leasing activity should remain strong at 1.9 million square feet, and new construction will hover close to 1 million square feet. The Southeast and Northeast trade areas will have over 50 percent of the new construction within their boundaries. Continued development of smaller out-parcels and multi-tenant shop buildings will dominate the new construction arena, as will redevelopment of existing pad buildings.
Velocity Retail Group provides its clients with a dedicated research department that tracks the activity of over 4100 buildings totaling nearly 173 million square feet of retail throughout the Phoenix metropolitan area. The company’s research includes retail buildings 10,000 square feet and over and specializes in big box research.