Commercial real estate started the year busy across all asset classes in Greater Phoenix, with market participants back and ready to make deals happen. Owner-occupant office and industrial properties, particularly in North Phoenix and beyond, are in high demand. Land and special-use properties are notably active, along with single tenant net lease properties. This segment of CRE has a unique buyer base, including family offices, cash buyers, and others who are interested in income-generating assets. Office has continued its trend from last year. Large, multi-tenant high-rise office buildings are selling, albeit at extreme discounts, and some are selling with repurposing in mind. Some of these projects include converting some suites to condos, opening up ownership opportunities for occupants, and there have been a few sales of entire buildings to owner occupants. Medical office building sales are strong, with numerous transactions taking place since the beginning of December, and pricing remaining solid. Contributing to this subsector’s resilience, and its vacancy rate at around 11.5%, are several factors: tenant retention/long-term leases, steady returns and cash flow, and limited new construction.
Multifamily Facing Headwinds, Making Rent Concessions
Meanwhile, multifamily is continuing to experience headwinds in occupancy, with a fairly high vacancy rate hovering around 12.9%. That is a concern, especially with additional inventory coming up on the market. Vacancies aside, multifamily properties are still selling, while competing against a lot of the same type of inventory that is currently on the market and soon to be delivered.
On January 16, the Wall Street Journal put the spotlight on Phoenix for having the largest percentage of rent concessions in the country: An estimated 54% of rentals in the Phoenix metro are giving tenants at least one month off their rent. Such an incentive allows landlords to keep the rent rolls higher. They get to the same place as they would from decreasing monthly rates, but the strategy makes the financials more attractive from an investor’s perspective—especially given the vacancy rates. Making rent more affordable on the front end results in stabilized higher rental rates on the back end.
Beyond the financial incentives, landlords have gotten creative about how to entice would-be renters, with some offering options such as new appliances, Amazon gift cards, discounted sports tickets, and free moving trucks. Even with those incentives, the overall trend in the Valley has been a decrease in rental rates. At the end of 2025, rents in Phoenix had dropped 4% year-over-year compared to the national figure of 1.3%, according to Apartment List.
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