Office Market
As the third quarter begins, office vacancy in Phoenix continues to rise steadily. Many businesses are reassessing their space needs, often leading to reductions or closures. Additionally, job growth in traditional office-using sectors has been sluggish for over two years. This structural decline in space demand has driven vacancy up by more than 550 basis points since Q4 2019, with further increases expected in the midterm as pre-pandemic leases come to an end.
| SUB-MARKET | TOTAL SF AVAILABLE | VACANCY RATE | MARKET RENT | NET ABSORPTION SF | UNDER CONSTRUCT SF |
|---|---|---|---|---|---|
| TOTAL: | 198M | 16.9% | $29.65 | -998K | 962k |
| 4 & 5 STAR | 71M | 25.9% | $34.37 | -353K | 560K |
| 3 STAR | 88M | 13.8% | $28.64 | -484K | 402K |
| 1 & 2 STAR | 38M | 7.4% | $23.10 | -160K | 0 |