Office Market
As the second quarter comes to a close, Phoenix continues to experience a steady rise in office vacancies. Local businesses are closely examining the efficiency of their office spaces, frequently leading to reductions or closures. This structural decrease in demand has caused market-wide vacancy rates to increase by more than 500 basis points since the fourth quarter of 2019. Further increases are expected in the midterm as leases signed before the pandemic or on short-term extensions expire, prompting tenants to make longer-term decisions about their space requirements.
| SUB-MARKET | TOTAL SF AVAILABLE | VACANCY RATE | MARKET RENT | NET ABSORPTION SF | UNDER CONSTRUCT SF |
|---|---|---|---|---|---|
| TOTAL: | 197M | 16.5% | $29.64 | -327K | 1M |
| 4 & 5 STAR | 71M | 25.7% | $34.54 | -202K | 693K |
| 3 STAR | 89M | 13.4% | $28.49 | -107K | 475K |
| 1 & 2 STAR | 38M | 7.0% | $23.16 | -19K | 0 |