Phoenix Retail Market Report, Q3 2026
A summary of the Maris Advisors Q3 2026 Phoenix Retail Market Report: the headline figures, the quarter in review and the notable deals. The full report is available on request.
Headline Figures
Executive Summary
Phoenix retail vacancy stands near 4.4%, flat on the quarter and 10 basis points lower than a year ago — among the lowest of the four sectors. Third-quarter net absorption was about 175,000 SF.
Average asking rent is about $21.24 per SF per year, NNN — a penny a month below the second quarter and about 6% above a year ago. About 2.6 million SF is under construction, of which roughly 0.9 million SF is three master-planned East Valley sites not scheduled to deliver before late 2027.
Quick-service drive-thru space changed hands in bulk as Salad and Go closed, with a coffee and food operator taking over its Arizona leases for conversion.
Grocery remained the most active expansion category, with Aldi's store pipeline and Sprouts' flagship, while a big-box project in Gilbert showed the entitlement risk new large-format sites can face.
The tightness remains a supply condition, not a demand boom: little quality space to lease, little speculative retail being built, and landlord leverage showing up in the concession package rather than the face rate.
Quarter in Review
Grocery drove the quarter's openings: Sprouts' flagship at its CityNorth headquarters site in July, a 64,000 SF Safeway anchoring The Gilmore in Gilbert, and Aldi's three Phoenix openings toward a target of 40 Valley stores by 2030. The one large-format setback was in Gilbert, where Target withdrew from a contested SimonCRE site after a long approval process and community opposition — a reminder of the entitlement risk new big-box sites carry.
Quick-service drive-thru space changed hands in bulk. Salad and Go closed every location, and a holding company tied to the founders of Dutch Bros agreed to buy its assets for $105 million, taking over the Arizona and Nevada drive-thru leases for conversion to coffee and food. Leslie's Chapter 11 and its 76 company-wide closures add pad and inline space to watch. At Chandler Fashion Center, the remodel shifts common area toward gathering and entertainment use. In our view, regional malls are likely to keep reallocating common area that way.
Quarter Comparison
| Metric | Q3 2026 | Prior Qtr | Year Ago |
|---|---|---|---|
| Vacancy | 4.4% | 4.4% | 4.5% |
| Net Absorption | 175,000 SF | N/A | N/A |
| Under Construction | 2,550,000 SF | 2,700,000 SF | 3,190,000 SF |
| Avg Asking Rent (NNN) | $21.24/SF/yr NNN | $21.36/SF/yr NNN | $19.92/SF/yr NNN |
Trend
Vacancy moved from 4.5% in Q3 2025 to 4.4% in Q3 2026.
Notable Deals
Notable Leases
- Safeway · South Gilbert · 64,000 SF
- Fitlab Az · Scottsdale/Salt River · 31,300 SF
- Goodwill · Central Peoria/Arrowhead · 28,000 SF
Notable Sales
- CH Realty XI/R Phoenix Elm Street LLC · 16825 N. 145th Ave., Surprise · Surprise (Northwest Phoenix) · 51,000 SF
- — · 1830 E. Baseline Rd., Mesa · Mesa · 105,000 SF
- — · 3801 N. 33rd Ave., Phoenix · North Central Phoenix · 155,000 SF
- — · 2222 & 2250 W. Happy Valley Rd., Phoenix · Phoenix (North I-17) · 16,200 SF
- Mesa Main 2 South LLC · 2453 E. Main St., Mesa · Mesa · 10,900 SF
- — · 550 W. Mckellips Rd., Mesa · Mesa · 34,100 SF
- — · 19027 N. 83rd Ave., Peoria · Peoria (Northwest Phoenix) · 15,500 SF
- — · 1411 S. Power Rd., Mesa · Mesa · 9,380 SF
Square footage only; every other deal figure stays in the full report.
Who’s Winning, Who’s Losing
Who’s Winning
Grocery and value-format tenants with a store pipeline, and operators able to take second-generation space — with little new supply competing for them, these are the tenants landlords are making room for. Quick-service operators positioned to absorb a chain's drive-thru pads in bulk.
Who’s Losing
Tenants who need modern space in an affluent submarket on a short timeline: that inventory is scarce and most of what is under construction is far-horizon. Local and regional inline tenants, who are carrying permitting-delay risk and 3.5% to 4% escalations while asking for shorter terms.
Maris Advisors Market Insight
The escalation rate deserves the same attention as the starting rate: at 3.5% to 4% a year, two leases with the same face rent can differ by several percent of total rent over a ten-year term.
Leverage is still showing up in terms rather than in the face rate. The 3.5%–4% annual escalation has become the standard on new deals, soft-cost coverage is being resisted, above-cap improvement dollars carry higher amortization rates or credit guarantees, and rent commencement is enforced regardless of permitting delays. Comparing two retail deals on asking rent alone understates what actually separates them.
Questions and Answers
What was the vacancy rate for Phoenix retail space in Q3 2026?
Vacancy was 4.4% in Q3 2026.
How much net absorption did the Phoenix retail market record in Q3 2026?
Net absorption was 175,000 SF in Q3 2026.
How did vacancy compare with the prior quarter?
Vacancy was 4.4% in Q3 2026, against 4.4% in Q2 2026.
Where can I get the full Q3 2026 Phoenix Retail Market Report?
The full report is available on request from Maris Advisors through the reports page.
The Full Report
The complete Q3 2026 Phoenix Retail Market Report, with every table and chart, is available on request from Maris Advisors.