Office Market
Office vacancy rates in Phoenix continue to climb steadily as the year comes to a close. Many businesses are reevaluating their space needs, often opting for reductions or closures. This trend is compounded by sluggish job growth in traditional office-using industries for over two years. As a result, vacancy rates have risen by more than 550 basis points since Q4 2019. With pre-pandemic leases nearing expiration, further increases in vacancy are anticipated in the medium term.
| SUB-MARKET | TOTAL SF AVAILABLE | VACANCY RATE | MARKET RENT | NET ABSORPTION SF | UNDER CONSTRUCT SF |
|---|---|---|---|---|---|
| TOTAL: | 197M | 16.8% | $29.57 | 166K | 753K |
| 4 & 5 STAR | 71M | 27.0% | $34.69 | 228K | 582K |
| 3 STAR | 90M | 12.7% | $28.12 | 69K | 171K |
| 1 & 2 STAR | 37M | 7.3% | $23.18 | -131K | 0 |