It appears that the Covid hangover is over, at least in the Phoenix metro area. Velocity Retail Group’s recent survey put the year-end 2022 vacancy rate at 5.7%, a 40 year low for the market. This impressive showing was fueled by absorption of 3.6 million square feet of space, which far eclipsed the 10-year average which was 1.5 million leased square feet.  The high was in 2010 when the vacancy rate was 13.4%.

Velocity’s Dave Cheatham has more, “This is a change we haven’t seen since 2007. You have 15 years of nothing really exciting happening and now this is a complete game-changer.” Cheatham believes the big centers will follow the population growth in the outlying areas of Surprise, Buckeye and Goodyear — “that’s where most of the new power centers are going to be built.”

Cheatam provides some caution moving into 2023. Rising interest rates, inflation, and the costs for labor and construction can hamper growth in the retail sector. But overall he is bullish on new retail development moving forward.