The Phoenix Commercial Real Estate Market

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Across the country, commercial real estate professionals eye Phoenix as a resilient, fast-growing market opportunity in which to invest successfully.

The Phoenix MSA’s resilient job sector, population growth, attractive CRE inventory, and multiple corporate regional headquarters position the region as a viable option for investors and tenants alike. Crexi equips individuals seeking Phoenix commercial property and the agents representing them with an all-in-one platform to buy and sell commercial real estate.

Buyers and tenants harness Crexi’s robust marketplace and search tools to browse through thousands of Phoenix-Mesa-Chandler-Scottsdale MSA and find the perfect fit. Too, brokers in Phoenix utilize Crexi’s marketing and listing management tools to connect with potential buyers and guide deals from listing to close quickly and efficiently. Crexi’s suite of robust broker tools connects Phoenix commercial brokers with viable, actively-searching leads, no matter where they’re based.

As of this writing, Crexi has helped commercial real estate professionals successfully close more than $440 billion in property value and market over half a million properties valued at $5 trillion.

Crexi is proud to serve Phoenix, Mesa, Chandler, Scottsdale, Glendale, Tempe, and beyond as the fastest-growing online commercial real estate platform.

Phoenix, Arizona's desert with a cactus in the foreground

The State of Commercial Real Estate in Phoenix

The Phoenix metropolitan area, the Valley of the Sun, is a significant hub in the southwestern United States. The region encompasses over 14 cities and covers approximately 14,000 square miles. With a population of over 4.9 million people, this bustling region is one of the fastest-growing metropolitan areas in the US and one of the largest.

Phoenix has always been known for its hot and dry climate, with an average temperature of 75 degrees Fahrenheit. But the region is not only famous for its weather. It has also become a melting pot of cultures. Due to its location, Phoenix has a unique natural landscape that offers opportunities for diverse recreational activities and is also home to several attractions, including world-renowned museums, performing arts centers, and sports venues.

The Phoenix metropolitan area is primarily driven by its thriving economy based on technology and service industries. The region’s affordable cost of living attracts residents and businesses alike, developing a solid and varied commercial real estate market. With its stable economy, diverse job market, unique natural surroundings, and cultural amenities, Phoenix is rapidly emerging as one of the most attractive places to live and do business in the United States.

Phoenix Regional Breakdown

The Phoenix metropolitan area has experienced remarkable population growth over the last ten years. According to the United States Census Bureau, Maricopa County’s population (where Phoenix is located) stands at over 4.5 million people, representing a 19.2% rise in population since 2010. This burgeoning population has contributed to the development of a thriving economy in the region, which is expected to further catalyze growth in the future.

  • Phoenix is the capital of Arizona, home to over 1.6 million in the city and over 4.9 million in the metropolitan area.
  • The most populous cities in the MSA are Phoenix, Mesa, Chandler, Gilbert, Glendale, Scottsdale, Peoria, and Tempe.
  • The employed population has increased by 3.2% yearly, while median household incomes have grown by 5% and median property values by 7.7% over the same period, according to Data USA.
  • Median age in Phoenix is 37.6, a little less than the figure in Arizona and the US.
Phoenix, Arizona, USA downtown cityscape at dusk.

Phoenix Job Market

The Greater Phoenix area boasts a resilient economy that has weathered the storms of the pandemic. Phoenix has continued to see strong growth rates, with an economy adapting to focus on technology and service industries. The per capita income of a Phoenix resident is $38,713, while the median household income is reported to be $75,731 by Census Reporter

The cost of living is slightly higher than the national average, but it remains competitive compared to comparable markets. The region’s strong economy, diverse job market, and affordable living standards are key factors behind its continued population growth, which has, in turn, fueled the development of the Phoenix commercial real estate market.

  • The total GDP for Phoenix-Mesa-Scottsdale MSA is over $316 billion, soaring by 70% over the past ten years.
  • The unemployment rate is 2.9% (BLS February 2023), about 600 basis points below the US.
  • Employment sectors reporting the most robust gains include mining, logging, construction, and education and health services.
  • Major employers in Phoenix are Banner Health, American Express, Amazon, Honeywell, Walmart, Fry’s Food Store, and U-Haul.
  • Key industries in Greater Phoenix include advanced business services, aerospace and defense, autonomous and electric vehicles, blockchain, finance and insurance, semiconductors, and health and biomedical.
  • Chandler, Scottsdale, and Tempe are ranked among the best cities for jobs in the US by WalletHub.
  • Arizona State University in Tempe, Grand Canyon University in Phoenix, and Arizona State University West Campus in Glendale are ranked among the best colleges in the Phoenix Area by Niche.com.
  • Nearly 35% of residents hold a bachelor’s degree or higher, about 10% higher than the rate in Arizona.
  • Phoenix is less than a half-day drive to metro areas, including Los Angeles, Riverside-San Bernardino, San Diego, Las Vegas, Albuquerque, and Tucson.
  • The metro area offers direct interstate access to the international border crossing of Nogales, Mexico.
  • Phoenix is home to two major airports – Sky Harbor International and Phoenix-Mesa Gateway Airport.
Aerial view of the interchange where Interstate 17 meets the Loop 101 looking north in Phoenix, Arizona

Phoenix Industrial Market

The Southwest Valley – home to cities including Avondale, Litchfield Park, and Goodyear – accounted for more than 60% of new leasing in Q1 2023 due to the area’s proximity to Los Angeles, Long Beach, and Southern California. Cushman & Wakefield reports the industrial construction pipeline in Phoenix is second only to Dallas, with nearly 90% of new inventory in the warehouse/distribution sector:

  • Total industrial inventory: 375,518,563 SF
  • Overall asking rents: $1.21/SF per month 
  • Direct vacancy rate: 4.2%
  • Net absorption: 4,468,460 SF in Q1 2023
  • Key lease transactions by tenant: Cubework 915,160 SF, Sysco 353,662 SF, Verst Logistics Group 222,874 SF
  • New construction: 47,451,070 SF with warehouse/distribution accounting for 42 million SF of new product in the pipeline
  • Key sales transactions by property: Ryan West Business Park $38.2 million SF in Tolleson, Chandler Airpark Technology Center $35.3 million, Chandler Crossroads I & II $40.1 million
  • Largest industrial submarkets: Southwest Valley, Southeast Valley, Airport

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Phoenix Office Market

According to the most recent report from Newmark, the Phoenix office market is experiencing a welcomed slow down as leasing activity evens out. Vacancies remain elevated in direct and sublet space, but construction and deliveries have decreased significantly with no notable new starts. This presents an opportunity for the metro to stabilize while other property types, such as industrial and multifamily, are being developed instead. Companies may have to look at existing office space on the market, which may help to drive the sublease vacancy rate below its already low 4.1%.

  • Total office inventory: 97,787,202 SF
  • Average asking rent (all classes): $28.99/SF per year, full service gross
  • Vacancy rate: 17.2% overall
  • Absorption: 47,209 SF (Q1 2023) vs. -310,979 SF previous quarter
  • Key leases by tenant: Indeed 54,716 SF, MUFG Union Bank 53,405 SF, Progress Residential 40,812 SF
  • New construction: 357,054 SF vs. 1,242,970 SF same period last year
  • Deliveries: 82,272 SF current quarter vs. 534,996 SF year-ago period
  • Investment sales by building: Mesquite Corporate Center $32 million, Chandler Corporate Center $22 million, Scottsdale Gateway 2 $19.4 million
  • Largest office submarkets: Tempe, Downtown North/Midtown, Scottsdale North/Airpark 

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Downtown Phoenix

Phoenix Retail Market

The Phoenix retail market had a successful start to the year in 2023, with vacancy levels remaining relatively low. Investor and tenant activity was strong across all submarkets, particularly Northwest Phoenix and Southeast Valley. The average asking rental rate for the area was highest in Scottsdale ($26.53/SF) and lowest in Mesa ($12.69/SF). Nearly 500,000 SF are currently being built throughout metro Phoenix to meet anticipated population and job growth. These are the most recent Phoenix retail trends from Cushman & Wakefield:

  • Total retail inventory: 133,354,265 SF
  • Overall asking rent: $17.18/SF per year, NNN
  • Direct vacancy rate: 5.2% 
  • Absorption: 286,866 SF in 2022, with 468,730 SF under construction
  • Key leases by tenant: EOS Fitness 103,256 SF, At Home 84,000 SF, Slick City 34,425 SF, Sprouts Farmers Market 28,000 SF
  • Key sales by property: Metrocenter Mall $40.8 million, Crossroads Plaza $14.7 million, Glendale Palms $13.4 million
  • Largest retail submarkets: Southeast Valley, Northwest Phoenix, North I-17, Scottsdale

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Highway in Downtown Phoenix

Phoenix Multifamily Market

According to a report from AZ Big Media, Phoenix is among the top 10 markets for multifamily investment. Over 700,000 have migrated to the metropolitan area since 2010, drawn by the region’s ample job opportunities, sunny climate, and abundant outdoor activities. Here are the recent multifamily trends in Phoenix from Northmarq:

  • Total housing units: 2,028,321
  • Multi-unit inventory: 23% of total housing units, about 10% higher than the rate in Arizona 
  • Renter occupied: 44% (Zumper)
  • Average rents: $1,616
  • Vacancy rate: 6.4%
  • New construction: 34,239 units under construction, with 12,924 units delivered through Q4 2022
  • Transaction activity: $242,400 median price per unit with cap rates at 5%
  • Key sales by property: SeventyOne 15 McDowell $150 million ($547,445/unit), Liv Crossroads $116 million ($325,843/unit), Crestone at Shadow Mountain $79.2 million ($319,556/unit)

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Get more in-depth Phoenix market data with Crexi Intelligence.

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Shanti Ryle
Shanti Ryle

Content Marketing Manager

Shanti leads Crexi's content marketing strategies with 7+ years of content development experience, creating everything from blog posts to award-winning podcasts. Previously, she worked on content teams at Snapchat, Weedmaps, and HopSkipDrive as well as developed copy, articles, and media for freelance publications.

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