While some parts of the U.S., particularly in the South, are seeing retail vacancies rise, the Phoenix retail market continues to hold strong. 

Phoenix retail vacancy rates held below 5% in the second quarter of 2026, while rents continued to rise and average retail sale prices climbed to $296 per SF. 

“Speed is the whole game right now,” said Joshua Thompson, studio director at LGE Design Build. “Tenants and landlords don't have time to lose on a slow process, and this is where LGE Design Build's collaborative model shines.” 

Thompson will be speaking at Bisnow’s Phoenix Retail & Mixed-Use Summit on Aug. 18 at the Hilton Scottsdale Resort and Villas. He spoke with Bisnow about what’s driving the booming Phoenix retail market and what developers need to know about building an experiential retail site that will keep people coming back. Register here for the event. 

Bisnow: The Phoenix retail market in 2026 has been described as showing stable vacancy, steady demand and ongoing rent growth. What is driving these positive trends? 

Thompson: Based on what we’re seeing from our retail clients, it comes down to the basics of supply and demand. Vacancy is low while rents are high because very little speculative retail has been built in recent years. What's under construction now is almost entirely need-driven. Layer in Phoenix's continued population growth, corporate relocations and the shift toward grocery-anchored, experiential and mixed-use formats, and retailers have good reasons to commit. 

Owners and developers increasingly want a destination, not a strip center. Equally, markets in the Valley crave unique concepts, and not only national chains. Look to examples such as Heritage Park in Gilbert and The Switchyard in Queen Creek that our team is currently building. It's more important than ever that this vision carries cleanly from design through construction, and that you’re collaborating with a skilled team to deliver it.

Bisnow: How is LGE Design Build capitalizing on the booming Phoenix retail market? 

Thompson: LGE Design Build is one of the few large-scale commercial firms in Arizona with architecture, interior design and construction under one roof. Because our architects and construction team work side by side from day one, we can take a retail or mixed-use project from site planning through design and into construction without the handoffs that slow other teams down. 

We're bringing that same design-build collaborative approach to tenant improvement work, which is where we're focusing right now. Landlords and tenants get one team who handles design and construction for their space from the initial space plan to opening day, instead of coordinating separate architects and contractors on a deadline. In a market with low vacancy, getting a tenant open faster is often the difference in landing the deal, and that's exactly the kind of speed our tenant improvement clients are asking for.

Bisnow: You're speaking on a panel titled Live, Work, Play Is Not Enough: How Today's Mixed-Use Developers Are Creating Identity, Not Just Square Footage. What are some of the ways developers create identity in mixed-use developments? 

Thompson: Identity isn't created by names on a rent roll. It comes down to curating tenants instead of just filling space, architecture that actually responds to where it is rather than a box that could sit in any suburb, and a real anchor that gets people to come back for something other than just running an errand. Add enough residential and office nearby to keep the place alive at 8 a.m., 1 p.m. and 9 p.m., and you've got a neighborhood instead of three boxes on a site plan labeled live, work and play. That's the same lens we bring to our own retail and mixed-use design work, and it's exactly what I'll be interested in hearing more about from the panelists.

Bisnow: What are Phoenix retail and mixed-use developers seeing in terms of construction costs, and how can they best manage cost and schedule risk in the current market?

Thompson: Materials and labor costs are still running higher year-over-year, with steel and other metals being the most impacted. It’s not just the tariff policy debate driving that — demand itself is a real factor right now. Our subs tell us data center work is pulling steel and skilled trades away from everything else being built right now. So even though short-term fluctuations appear to be moderating, the risk to a project isn't the initial pricing number — it's the number six months into construction. Having architecture and construction under one roof means we're pricing a project and identifying long-lead items while we're still finalizing documents. That allows us to secure pricing and place orders on those items early, well before a traditional design-bid-build process even knows what to order. It's the difference between hoping the market holds and actually locking in your number and your schedule, and that kind of certainty is exactly what owners are asking for right now.

Bisnow: What are some key takeaways you hope attendees have from the event? 

Thompson: This room will be packed with the people actually deciding where Phoenix retail goes next, and I want attendees to leave with a real read on where the opportunity lies, not just another set of vacancy and rent-growth stats. That means hearing straight from the people underwriting and delivering these deals about where demand is actually landing and seeing firsthand how the best mixed-use projects are designed to create an identity people want to be part of, not just square footage to fill. If you're trying to figure out where your next dollar or your next deal belongs in this market, these conversations are where you'll find the answer.

This article was produced in collaboration between LGE Design Build and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.