— By Walt Brown Jr. of Diversified Partners — Metro Phoenix continues to post strong retail market conditions, supported by expansion-ready corridors, dense and established trade areas, sustained population growth and retail sites positioned at major intersections with strong traffic counts. Even with shifting capital markets and more disciplined underwriting, retail remains one of the metro’s more consistent performers heading into 2026. A defining constraint today is the limited availability of well-located, credit-tenant triple-net product for sale. This is particularly true in “A” locations within “A” trade areas. That scarcity is keeping competition elevated for stabilized assets and reinforcing pricing for deals that offer clean income, durable tenancy and long-term visibility. At the same time, demand for credit-tenant, triple-net transactions remains strong across Arizona, with Metro Phoenix continuing to attract a meaningful share of that activity. A key driver has been capital migration and reinvestment from higher-cost Western markets, including owners selling assets in California and the Pacific Northwest and redeploying proceeds into Phoenix-area retail. For many buyers, the appeal is straightforward: growth, demographics and a business climate that supports continued tenant expansion. On the development side, the market remains supply constrained at the top end of quality. Across the …
— By Karl Abert and Bret Zinn of Kidder Mathews — The Phoenix multifamily market is still digesting the effects of an unprecedented development cycle, while beginning to show early signs of stabilization. Although near-term operating fundamentals remain challenged, several forward-looking indicators suggest the market is gradually moving toward equilibrium as it enters 2026. Vacancy increased to 12.6 percent in the fourth quarter, up 80 basis points year over year, according to Kidder Mathews research. This reflects the cumulative impact of elevated construction deliveries over the past several years. Average asking rents declined 3 percent year over year to $1,529 per unit, underscoring the competitive leasing environment owners continue to face. These trends confirm that Phoenix remains in a tenant-favorable phase of the cycle, particularly in submarkets that experienced outsized levels of new supply. Encouragingly, the development pipeline is contracting meaningfully. Units under construction declined nearly 30 percent year over year, while last year’s deliveries fell sharply compared to 2024. This slowdown represents a critical inflection point for the market. As new supply tapers, demand will have greater opportunity to absorb existing inventory, setting the stage for gradual improvement in occupancy and rent growth. While net absorption remained positive in …
— By Sean Spellman of JLL — While Metro Phoenix’s best-of-the-best office submarkets are thriving, overall fundamentals are being shaped by our supply story. That narrative is one where new construction is metered and speculative development is expensive. The result is a lack of new inventory that could limit corporate location decisions, especially from tenants comparing top-tier availability across multiple markets. Today’s Metro Phoenix demand is definitively concentrated at the high end of the product spectrum. Downtown Tempe uniquely reflects this trend. During the pandemic — and on the heels of a flood of new office construction — this typically single-digit-vacancy office market skyrocketed to 30 percent vacancy. Fortunately for downtown Tempe, those new office deliveries were dominated by amenity-rich, Class A product. In the years since, a flight to quality has eased downtown Tempe’s office market vacancy back into the 5 percent range. Developments like Hayden Ferry Lakeside have absorbed almost all of the occupancy lost during the pandemic, and prospective tenants are actively competing for what Class A space remains. The highly amenitized Grove in the Camelback Corridor has enjoyed similar success. Along with the office space at Goodyear Civic Square, it’s one of the last speculative Class …
— By Richard Schwartz of SRS Real Estate Partners — The Inland Empire industrial market has undergone significant recalibration over the past 24 months, moving from the “too hot” environment of 2022 and 2023 marked by record construction and rent escalation to a period of normalization. Construction-driven vacancy has pushed the market into a digestion phase, marked by softening rents, adjusting sale prices and a reset in landlord-tenant expectations. These dynamics will unlock new opportunities as we enter 2026. Limited New Development Creates Breathing Room CoStar data compiled by SRS shows that new construction peaked in 2023 with about 29.5 million square feet delivered. This was followed by 17.8 million square feet in 2024 and an expected 16 million square feet in 2025. Deliveries are projected to fall to roughly 10 million square feet in 2026, making it the lightest post-pandemic year of new supply. This delivery includes several notable projects, such as Amazon’s 2.5-million-square-foot “middle-mile” facility in Hesperia, a 650,000-square- foot storage facility in Desert Hot Springs and a 1.2-million-square-foot facility in Apple Valley that’s leased to Lecangs. This means that more than half of the Inland Empire’s 2026 construction pipeline is already pre-leased, reducing speculative exposure while accelerating the rise …
— By J.C. Casillas of NAI Capital — The Inland Empire office market continues to show signs of recovery, with broad-based tenant demand pushing occupancy higher and absorbing vacant direct space. While landlords are holding asking rents steady to capitalize on the improving environment, direct vacant space decreased 3.2 percent quarter over quarter and 16.4 percent year over year. Vacant sublease space fell a solid 4.5 percent quarter over quarter, though it nearly doubled year over year to 135,149 square feet at year-end. Renewed tenant activity continues to chip away at vacant space, reinforcing the recovery. In fourth-quarter 2025, net absorption — driven primarily by direct space — totaled about 557,000 square feet for the year, marking a meaningful milestone in the market’s rebound. The vacancy rate edged down 10 basis points quarter over quarter, supported by 106,095 square feet of space coming off the market. It now stands at 4.7 percent, 80 basis points lower than a year ago. Stabilization has been supported by shifting workplace strategies and evolving remote work patterns. Since the economy reopened following the pandemic, occupied office space has increased by nearly 2.1 million square feet, surpassing pre-pandemic levels. Sublease vacancy has fallen 22.5 percent …
— By Cray Carlson of CBRE — The Inland Empire multifamily market remains one of the premier markets to invest in across Southern California, benefiting from ample land availability and less restrictive regulations than many neighboring markets. Still, like many markets, there was a disconnect between buyers and sellers in 2024 and 2025 due to interest rates. It remains psychologically difficult for investors to sell a property with an existing 3.5 percent interest rate and complete a 1031 exchange into an asset carrying a 6 percent rate. That spread creates a meaningful mental hurdle, and has prevented many owners from disposing of their properties. That hesitation, however, has not erased opportunity. There are still great opportunities in the market, even with a 6 percent interest rate. The economic fundamentals remain strong, and cap rates have increased even amid higher interest rates. Cap rates have climbed since last year, and there are still great returns to be had. While many investors continue to struggle with the reality of higher borrowing costs, escalated interest rates are not going anywhere in the near term. In 2024, the Inland Empire recorded 74 multifamily transactions of eight units or more. As of the beginning of …
— By Bill Asher of Hanley Investment Group Real Estate Advisors — The Inland Empire continues to demonstrate its resilience as one of Southern California’s most dynamic retail investment markets. In the third quarter of 2025, transaction activity accelerated, pricing held firm and cap rates compressed, underscoring investor confidence in the region’s long-term fundamentals. Even with vacancy rising and rent growth moderating, investment trends point to a market adjusting as capital continues to favor necessity-based, internet-resistant formats. According to CoStar, 73 retail properties traded in third-quarter 2025 compared to 48 in the same quarter of 2024. Average cap rates declined from 7.2 percent to 6 percent year over year, signaling stronger pricing and heightened demand. Single-tenant net lease properties led the surge, with 46 transactions in third-quarter 2025 versus 28 a year earlier. Average cap rates tightened to 5.9 percent, down from 6.8 percent in third-quarter 2024. Multi-tenant retail also showed healthy demand, with 22 properties sold in third-quarter 2025 versus 20 in third-quarter 2024, and average cap rates compressed from 7.4 percent to 6.2 percent. This momentum reflects a convergence of factors that shaped the second half of 2025. Pent-up demand and impatient capital deployed equity as many sellers …
— By Bryan Ledbetter of Western Retail Advisors — Phoenix’s retail market continues to surge. Vacancies are dipping below 5 percent, gross absorption is exceeding 1.5 million square feet in the third quarter and asking triple-net rates continue to increase, reaching into the mid-$50 to $60 per square foot range for newly constructed space. West Valley Leads the Charge in New Development After decades of limited retail construction, metro Phoenix — and the West Valley, in particular — are flush with new space. Projects like SimonCRE’s Prasada in Surprise and Vestar’s Verrado in Buckeye are among the major new developments providing the high-end availability that tenants and residents have been asking for. Although elevated debt and construction costs have tempered new development, more than 1.2 million square feet is still under construction. The lion’s share of that product is already pre-leased. This keeps developers and investors bullish on Phoenix, and on the lookout for the Valley’s next development frontier. Though the West Valley reigns as Phoenix’s latest retail boom market, outliers in the East Valley are teeing up for their turn in the spotlight. Apache Junction is a great example… Far Southeast Valley Emerges as a Growth EngineA neighbor of …
— By Rick Nelson of Mark IV Capital — The Northern Nevada industrial market continues to stabilize following several years of rapid expansion and then a recalibration driven by broader economic uncertainty. Current conditions have presented challenges, particularly in the logistics and distribution sectors where tariffs and shifting trade policies have created a more cautious investment climate. Fortunately, there are signs of resilience and forward momentum. The region’s vacancy rate stands at 11.7 percent, down from its peak in fourth-quarter 2024, per CBRE. The market also recorded its third consecutive quarter of positive net absorption, with 130,433 square feet absorbed that quarter, bringing the year-to-date total to 1.9 million square feet. Although current construction activity has moderated to 1.6 million square feet currently underway, the development pipeline remains robust, with an additional 15.8 million square feet in planning stages. This underscores sustained investor interest despite elevated vacancy and measured tenant activity. Advanced manufacturing and data centers are poised to be the vanguard of industrial development in the greater Reno area going forward. Cushman & Wakefield recently named Reno No. 5 among emerging data center markets worldwide in its 2025 Global Data Center Market Comparison Report. This recognition reflects the growing …
— By Ben Galles of CBRE — The Reno multifamily market started 2025 with a large supply of new Class A units that was delivered in the fourth quarter of last year. Despite some market challenges, leasing activity of the new supply has gone well, given the limited construction pipeline. There are currently fewer than 700 market-rate units under construction, with very few projects moving forward and starting construction. The constrained development pipeline will likely lead to a significant decrease in vacancy in the second half of 2026 and beyond. This should also start to push rental rates higher, which have been static or slightly down for most of the year, as many owners have offered rent concessions to lock in new tenants. While future market fundamentals are promising, many buyers remained on the sidelines because most deals have been presented at negative leverage. The average price per unit in 2025 (year to date) is down about 22 percent, while the price per square foot is down about 16 percent (year to date) from the previous year. This is due to a few things. First, there was an increase in the number of Class B and C assets that traded …