When the recession was in full swing, one of the markets that took the biggest hit was Phoenix. Residential and commercial real estate were overbuilt in the market, and the retail sector became a casualty. That’s all changing now, as retailers are starting to expand into the market. Retail real estate vacancy rates in Phoenix are currently around 10.5% and expected to fall below 10% by the end of the year, explains Tyson Switzenberg, vice president and retail broker lead in Phoenix for JLL. That’s a marked improvement from two years ago, when they were around 13.5%.
Right now retailers that are already in the market are focusing on filling gaps within the core and backfilling vacancies left by former tenants in shopping centers. There isn’t a whole lot of new development, so space is tight. “We’re seeing a lot of retailers relocating out of under performing stores into higher profile real estate,” Switzenberg explains. “The Phoenix retail market got into trouble in 2007 and 2008, when retailers were getting out ahead of rooftops. Retailers are cautiously looking in growth areas but are going to make sure that the customers are in place before committing.”
There are some concepts constructing new stores, though. Switzenberg points to discount grocer WinCo Foods and Sprouts Farmers Market as two chains looking to build and expand. While there are some concerns about potential grocery store closings in the area due to the parent company of Albertsons acquiring Safeway, Switzenberg says many of those closings could easily be backfilled by concepts like Planet Fitness and Blast Fitness, as well as furniture retailers such as, Ashley Furniture and Living Spaces.
To learn more about the Phoenix retail market, and how the market is fairing in the full story on GlobeSt.com.