The annual CCIM/IREM Forecast is our favorite pulse check on the Valley of the Sun—part market intel, part reality check, and a little bit of group therapy for Phoenix CRE. The 2026 outlook says the post-pandemic roller coaster is finally slowing down and giving way to a more sophisticated, quality-obsessed era where sloppy deals and “good enough” assets get left behind. With Greater Phoenix on track to hit 5.7 million residents by 2030, the message from industry leaders is pretty loud: 2026 is the year institutional capital comes back to the desert, but this time it is pickier, sharper, and very focused on execution.
Here is what you need to know about the “New Abnormal” in Phoenix real estate—and why it is less doom and gloom and more adapt-or-miss-out.
Office: Culture as a Competitive Sport
The “death of the office” headline has officially been retired and replaced with a full-blown “Flight to Quality,” and Phoenix is sitting in the bullseye. Instead of chasing the cheapest rent, tenants are hunting for buildings that flex their brand, attract talent, and help them box out competitors. Think Arbor Tempe and other culture-forward projects that feel more like curated environments than rows of cubicles. Concierge-style services, walkable coffee, and lifestyle amenities are no longer perks; they are the cost of entry. On the medical side, “healthcare follows rooftops” is the new religion, with proximity to hospitals now a core stability metric for medical office.
In 2026, office is less about how many desks can fit on a floor plate and more about: Does this building tell the right story—and would our people actually choose to be here?
Industrial: Powering the Manufacturing Machine
Phoenix is still the advanced manufacturing powerhouse, with this segment driving a huge share of recent net absorption and cementing the region’s status as a production and logistics hub. Demand is not the problem; power is. Converting traditional warehouse product to AC-cooled space is running around 1515 dollars per square foot, and data centers are rethinking how they cool facilities as utilities and grid capacity become a real constraint. Sky Harbor remains the tightest industrial pocket with rents north of 1.30 dollars per square foot, while Mesa Gateway is in a “hurry up and wait” phase with elevated vacancy as suppliers chase large new projects. Out along the 303 Corridor, big-box users north of 500,000 square feet still have meaningful runway.
Translation: the users are here and growing, but whoever can solve power, cooling, and timing in the right submarkets wins.
Apartments & BTR: Residents in the Driver’s Seat
Multifamily is working through its big supply wave, but the crest is finally in sight. Roughly 15,000 deliveries are anticipated in 2026, cooling to around 7,000 in 2027, which means concessions—including up to three months free in some cases—are likely to linger in the near term. Build-to-Rent, meanwhile, is still the darling of the space, holding high occupancy in the mid‑90 percent range as it competes directly with traditional single-family rentals and appeals to renters who want a home feel without the mortgage. With construction costs elevated, operators are shifting from “how high can we push rents?” to “how long can we keep the right residents?”—doubling down on service, communication, and experience.
In this cycle, the math is simple: retention is cheaper than replacement, and the properties that act like hospitality brands will pull ahead.
Retail: The Quiet Diamond
While other sectors have taken their turns in the drama spotlight, retail has quietly become the diamond of the portfolio. Vacancy has tightened to the mid‑4 percent range, a sharp improvement from levels seen a decade ago, and new projects are often close to fully spoken for before a shovel hits the ground, with pre-leasing hovering in the high‑80 percent range. The definition of an “anchor” has evolved: high-end restaurants, daily-needs, and “AI-resistant” services are replacing yesterday’s big‑box heavyweights. At the same time, tenants are feeling the squeeze from rising operating costs even as sales improve, making landlord–tenant collaboration less of a nice-to-have and more of a survival strategy.
The net result: well-located, well-merchandised retail is one of the steadiest players on the board, but success depends on partnership, not just rent rolls.
The Macro View: Living in the “New Abnormal”
Keynote speaker Danny Court summed it up as the “New Abnormal”—an economy that works very differently depending on which side of the income curve you live on. Lower-income households continue to wrestle with housing affordability, while higher-income households keep driving luxury spending and investment activity. AI is not showing up as the job-destroying villain of old headlines; instead, it is becoming a behind-the-scenes efficiency engine, helping lenders sort and structure deals faster and giving property managers leverage on the never-ending admin pile. Arizona remains a top performer nationally for employment growth, with strong in-migration bolstering the long-term demand story even as the broader economic narrative stays choppy.
Put simply: the fundamentals underpinning Phoenix real estate are still intact, but the bar for strategy, execution, and asset quality is much higher.
The Bottom Line for 2026
The “Wild West” chapter—when rising tides floated almost everything—is closing. The winners in 2026 are the owners, operators, and investors obsessed with quality: the right locations, well-maintained assets, and spaces that genuinely work for the people using them. Whether it is reimagining office into culture-forward environments, retrofitting industrial with smarter power and cooling, or doubling down on BTR and resident experience, the common thread is agility and end-user focus.
In this New Abnormal, playing it lazy is risky—but playing it smart has never looked more rewarding.
The 2026 Phoenix Real Estate Outlook: Navigating the “New Abnormal”
The annual CCIM/IREM Forecast is our favorite pulse check on the Valley of the Sun—part market intel, part reality check, and a little bit of group therapy for Phoenix CRE. The 2026 outlook says the post-pandemic roller coaster is finally slowing down and giving way to a more sophisticated, quality-obsessed era where sloppy deals and “good enough” assets get left behind. With Greater Phoenix on track to hit 5.7 million residents by 2030, the message from industry leaders is pretty loud: 2026 is the year institutional capital comes back to the desert, but this time it is pickier, sharper, and very focused on execution.
Here is what you need to know about the “New Abnormal” in Phoenix real estate—and why it is less doom and gloom and more adapt-or-miss-out.
Office: Culture as a Competitive Sport
The “death of the office” headline has officially been retired and replaced with a full-blown “Flight to Quality,” and Phoenix is sitting in the bullseye. Instead of chasing the cheapest rent, tenants are hunting for buildings that flex their brand, attract talent, and help them box out competitors. Think Arbor Tempe and other culture-forward projects that feel more like curated environments than rows of cubicles. Concierge-style services, walkable coffee, and lifestyle amenities are no longer perks; they are the cost of entry. On the medical side, “healthcare follows rooftops” is the new religion, with proximity to hospitals now a core stability metric for medical office.
In 2026, office is less about how many desks can fit on a floor plate and more about: Does this building tell the right story—and would our people actually choose to be here?
Industrial: Powering the Manufacturing Machine
Phoenix is still the advanced manufacturing powerhouse, with this segment driving a huge share of recent net absorption and cementing the region’s status as a production and logistics hub. Demand is not the problem; power is. Converting traditional warehouse product to AC-cooled space is running around 1515 dollars per square foot, and data centers are rethinking how they cool facilities as utilities and grid capacity become a real constraint. Sky Harbor remains the tightest industrial pocket with rents north of 1.30 dollars per square foot, while Mesa Gateway is in a “hurry up and wait” phase with elevated vacancy as suppliers chase large new projects. Out along the 303 Corridor, big-box users north of 500,000 square feet still have meaningful runway.
Translation: the users are here and growing, but whoever can solve power, cooling, and timing in the right submarkets wins.
Apartments & BTR: Residents in the Driver’s Seat
Multifamily is working through its big supply wave, but the crest is finally in sight. Roughly 15,000 deliveries are anticipated in 2026, cooling to around 7,000 in 2027, which means concessions—including up to three months free in some cases—are likely to linger in the near term. Build-to-Rent, meanwhile, is still the darling of the space, holding high occupancy in the mid‑90 percent range as it competes directly with traditional single-family rentals and appeals to renters who want a home feel without the mortgage. With construction costs elevated, operators are shifting from “how high can we push rents?” to “how long can we keep the right residents?”—doubling down on service, communication, and experience.
In this cycle, the math is simple: retention is cheaper than replacement, and the properties that act like hospitality brands will pull ahead.
Retail: The Quiet Diamond
While other sectors have taken their turns in the drama spotlight, retail has quietly become the diamond of the portfolio. Vacancy has tightened to the mid‑4 percent range, a sharp improvement from levels seen a decade ago, and new projects are often close to fully spoken for before a shovel hits the ground, with pre-leasing hovering in the high‑80 percent range. The definition of an “anchor” has evolved: high-end restaurants, daily-needs, and “AI-resistant” services are replacing yesterday’s big‑box heavyweights. At the same time, tenants are feeling the squeeze from rising operating costs even as sales improve, making landlord–tenant collaboration less of a nice-to-have and more of a survival strategy.
The net result: well-located, well-merchandised retail is one of the steadiest players on the board, but success depends on partnership, not just rent rolls.
The Macro View: Living in the “New Abnormal”
Keynote speaker Danny Court summed it up as the “New Abnormal”—an economy that works very differently depending on which side of the income curve you live on. Lower-income households continue to wrestle with housing affordability, while higher-income households keep driving luxury spending and investment activity. AI is not showing up as the job-destroying villain of old headlines; instead, it is becoming a behind-the-scenes efficiency engine, helping lenders sort and structure deals faster and giving property managers leverage on the never-ending admin pile. Arizona remains a top performer nationally for employment growth, with strong in-migration bolstering the long-term demand story even as the broader economic narrative stays choppy.
Put simply: the fundamentals underpinning Phoenix real estate are still intact, but the bar for strategy, execution, and asset quality is much higher.
The Bottom Line for 2026
The “Wild West” chapter—when rising tides floated almost everything—is closing. The winners in 2026 are the owners, operators, and investors obsessed with quality: the right locations, well-maintained assets, and spaces that genuinely work for the people using them. Whether it is reimagining office into culture-forward environments, retrofitting industrial with smarter power and cooling, or doubling down on BTR and resident experience, the common thread is agility and end-user focus.
In this New Abnormal, playing it lazy is risky—but playing it smart has never looked more rewarding.