Office Market
Despite being more than four years removed from the onset of COVID, pandemic-catalyzedshifts in demand continue to drive uncertainty in the Phoenix office market. Users arescrutinizing the efficiency and sizing of their space amid these shifting workplace strategies.Some tenants have opted to shrink and consolidate their footprints, while others are no longerleasing bigger blocks in anticipation of future headcount growth. The structural lowering ofdemand has led to a more than 50% increase in vacant space since 19Q4, with 2023 markingan acceleration of the move-out trend compared to the prior two years.
| SUB-MARKET | TOTAL SF AVAILABLE | VACANCY RATE | MARKET RENT | NET ABSORPTION SF | UNDER CONSTRUCT SF |
|---|---|---|---|---|---|
| TOTAL: | 196M | 16.2% | $29.49 | -201K | 1M |
| 4 & 5 STAR | 72M | 25.2% | $34.98 | -26K | 844K |
| 3 STAR | 85M | 12.8% | $27.28 | -85K | 173K |
| 1 & 2 STAR | 39M | 7.1% | $23.18 | -89K | 0 |