The metro Phoenix retail vacancy decreased to 8.0% at the end of 2019, a decrease of 40 basis points, when compared to the close of 2018 when the vacancy rate was 8.4%.
The retail market continues to tighten as new construction remains disciplined with 491,935 sq. ft. of product currently under construction. This is the lowest square footage under construction since year-end 2014 when there was 458,412 sq. ft. under construction across metro Phoenix.
Net absorption in the fourth quarter totaled 319,985 sq. ft. and gross absorption totaled 797,051 sq. ft. bringing net absorption and gross activity for 2019 to 1.2 million sq. ft. and 3.8 million sq. ft., respectively.
The overall average asking lease rate was $16.46 per sq. ft. (NNN) at the end of Q4 2019 compared to $17.49 per sq. ft. (NNN) one year ago.
Just over 550,000 sq. ft of retail space was completed in Q4 2019 bringing the year-to-date total to 855,615 sq. ft.
Notable completions in the quarter included the opening of a 67,000 sq. ft. Fry’s Food Store at Block 23 in downtown Phoenix and the opening of a 41,200 sq. ft. Whole Foods in downtown Tempe. The opening of both grocers marked the reentry of grocers to both downtown Phoenix and Tempe in many years.