2025 Yearly Market Update
Metro Phoenix Multi-Tenant Shopping Centers (10,000–100,000 SF)
Rein Retail Report • Mark Rein • Rein & Grossoehme
The 2025 market for multi-tenant shopping centers in the 10,000–100,000 square-foot range closed the year with selective strength. Fifty-nine centers traded for a total of $459.1 million and 1.82 million square feet. Average sale price was $7.78 million (range $1.325 million to $45 million), average size was 30,915 SF, and average price per square foot reached $274.42. Cap rates averaged 6.83 percent (5.53–8.90 percent), occupancy held at 93.8 percent, and sellers achieved 94.9 percent of asking price on average. Average rent per foot climbed to $25.72. Overall volume and square footage eased modestly, but unit pricing and occupancy both improved, reflecting a market that favored quality over quantity.
Compared with 2024, the shift is clear. Transaction count fell only two percent (60 to 59), yet total volume declined three percent and total square footage dropped fifteen percent. Price per square foot rose sixteen percent from $236.78, while average rent increased from $21.19 to $25.72. Cap rates compressed half a percent after expanding the prior year. Federal Reserve policy rates averaged 4.21 percent in 2025, down from above 5 percent through much of 2024. As interest rates declined, cap rates followed lower—exactly the relationship the market expects. Long-term commercial mortgage rates also eased 50–70 basis points, bringing all-in costs into the mid-to-upper 6 percent range. With average cap rates near 6.83 percent, the spread between borrowing costs and property yields remained tight. Sophisticated investors already understand that a narrow spread limits positive leverage and makes values more sensitive to rate moves; the 2025 data simply confirmed that dynamic in real time.
Looking forward, the Valley’s mid-sized shopping center market is settling into a more disciplined equilibrium. Strong occupancy, rising rents, and modest cap-rate compression point to continued investor preference for well-located, well-leased product. The fifteen-percent drop in total square footage traded suggests larger or more opportunistic assets stayed on the sidelines, while the sixteen-percent jump in price per foot shows that quality still commands a premium. With the rate environment more constructive than the year before and the mortgage-to-cap-rate spread remaining tight, owners who stay aggressive on leasing and capital improvements are best positioned. For both buyers and sellers, 2025 reinforces a straightforward truth: in this market, quality sells, and the best assets continue to pull away from the pack.
Refer to the Rein Retail Report for more data & statistics.
Data source: CoStar. Sales of multi-tenant shopping centers from 10,000 to 100,000 sq. ft.
Mark Rein • Selling Shopping Centers Since 1981
480.214.9414 • Mark@RGcre.com