Phoenix leads U.S. in demand for retail space

Shoppers out at busy malls today may not be surprised to hear metro Phoenix is leading the nation in demand for more retail space.

A new study by national real-estate group CoStar shows demand for new retail space in the region climbed 2 percent in the past year.

Coming in second in the demand for more shopping space is Salt Lake City, with a 1.3 percent increase. Dallas ranked third, with an almost 1.2 percent gain.

In metro Phoenix, empty big-box sites, occupied by retailers before the real-estate crash, began to fill up again last year with alternative users such as schools and churches and also with other retailers. Burlington Coat Factory, Walmart Neighborhood Market and Ross used several of the spots.

Baby Town, a new retailer, moved into a former Linens N Things store in Chandler’s Crossroads Towne Center at Loop 202 and Gilbert Road. A few months ago, Whole Foods Market filled a 35,000-squarefoot site vacated by a mattress store at the Town & Country shopping center in Phoenix.

“All the markings are there for a healthy retail rebound,” according to CoStar’s report about Phoenix.

Phoenix-based Velocity Retail Group reports that the southeast Valley was most affected by the shuttering of bigbox retailers, with nearly 129 buildings sitting empty during the past few years.

But the area’s vacancy rate fell to 12.8 percent recently from 14.8 percent two years ago.

During the first half of 2013, more than 525,000 square feet of retail space in the southeast Valley was leased. That’s slightly more than half of all retail space filled across metro Phoenix.

The overall vacancy rate for metro Phoenix retail space was above 10 percent at the end of third quarter. Velocity is forecasting the region’s vacancy rate will fall into the single digits by early 2014. The last time it was that low was in 2008.