MARKET SNAPSHOT

2026 Phoenix Forecast

2025

FORECASTED ANNUAL CHANGE

2026

$1,527

Q4 AVG. EFFECTIVE RENT

-0.5%

ANNUAL CHANGE

$1,519

Q4 Avg. Effective Rent

90.6%

Q4 AVG. OCCUPANCY

-10 BPS

ANNUAL CHANGE

90.5%

Q4 Avg. Occupancy

20,598

2025 COMPLETIONS

12,868

10 Yr. Avg. Annual Completions

11,356

2026 COMPLETIONS

15,431

2025 NET ABSORPTION

9,643

10 Yr. Avg. Annual Absorption

9,696

2026 NET ABSORPTION

Source: CoStar
Key Market Themes for 2026
  • Greater Phoenix’s 2026 economic outlook remains supported by multi-year, AI-linked investment—particularly across semiconductor expansion, advanced manufacturing, and data center infrastructure—providing a sturdy foundation for growth even as broader labor market volatility persists.

  • 2026 is expected to remain a challenging year for rent performance—potentially the fourth straight year of negative growth—as concessions continue to pressure effective rents even as deliveries begin to downshift. Recovery will be uneven, with submarkets like North Scottsdale, Gilbert, and Chandler turning positive sooner than supply-heavy areas such as the West Valley and Downtown Phoenix.

  • Stabilized occupancy is likely to remain rangebound around 90.5% in the near term as Phoenix works through excess inventory. A mixed job outlook and potentially weaker international net migration could modestly slow household formation, but longer-term demand drivers—strong demographics, a diversifying economy, and relative affordability—still support an eventual recovery once the supply glut clears.

MARKET OUTLOOK

Phoenix enters 2026 still working through an outsized supply cycle that has kept fundamentals under pressure despite healthy underlying demand...

Featured Arizona Research Reports:

Jim Crews

Jim Crews

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Joe Boyle

Joe Boyle

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