Q2 2020 Retail Market
The Greater Phoenix retail market ended the second quarter on the upside.
- Regardless of the retail sector being hit the second hardest of all CRE industries (second to hospitality), the market managed to produce 14,134 square feet of positive absorption.
- Vacancy settled at 7.3 percent, matching both over-the-quarter and year-over-year levels
- Rental rates inched up 2 percent year-over-year, but had a decline of 1.6 percent over-the-quarter, ending at $14.82 PSF
- Investment sales volume (over 10,000 SF & over $1 million) settled at $73 million during the second quarter, a drastic decrease of 67 percent from $223 million in the first quarter of 2020
Outlook: Despite daily negative headlines, retailers are diligently exploring new business solutions to stay open with the pandemic restrictions. A price discovery is still underway, with some community centers and neighborhood centers seeing 5 percent to 7 percent discounts.
As witnessed after two weeks into the reopening of the local economy in May, there is strong pent-up consumer demand to socialize and retrieve some pre-Covid lifestyle with added precautions. Obsolete malls and vacant large big box spaces are primed for entrepreneurial innovation and redevelopment.
In the midst of the COVID-19 outbreak, information and data is emerging at a quick and uneven rate. The information contained herein has been obtained from sources deemed reliable at the time the report was written. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.