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2021 Q4 Greater Phoenix Retail Market Report

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Q4 2021 Retail Market

Phoenix metro had increased its labor force by 18,300 employees compared to February 2020 (pre-pandemic). Vacancy decreased by 40 bps ending 6.8 percent. Investment sales reached nearly $2 billion in 2021, with 31 percent of that taking place in the fourth quarter. 217,000 square feet of new product completed in the fourth quarter, bringing year-to-date deliveries to 809,467 square feet. Asking rates reached $15.28 per square foot, an increase of 3.73 percent compared to 2020-year end. 

Key Takeaways
  • Investment sales topped $608 million this quarter, bringing year to date volume to $1.9 billion
  • Vacancy declined to record level of 6.8 percent
  • Rental rates increased 3.7 percent year-over-year to $15.28 per square foot
The labor market and talent pool in Phoenix are some of the primary reasons the retail market has been resilient throughout the pandemic compared to other market in the United States. The unemployment rate in Phoenix MSA posted the lowest level ever captured in the market, 2.8 percent at the end of November.

The Greater Phoenix retail market ended the fourth quarter with the same momentum as the third quarter, net absorption reached 530,082 square feet, bringing the year-to-date total to 1.2 million square feet of positive net absorption. 217,000 square feet of new inventory was delivered in the fourth quarter, bringing total deliveries during 2021 to 809,467 square feet.

Outlook
In the month of December, the number of Quick Service Restaurants that opened outpaced closings by 38 percent. Consumer spending has increased by 25.7 percent at the end of November compared to January 2020 throughout the entire Phoenix MSA. This is a very strong indication that the retail sector is thriving in the valley. As the population continues to increase from net in migration, the city is a focal point for new restaurant concepts and retail innovations.

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2021 Q4 Greater Phoenix Retail Market Report

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