Office Market
Despite being more than four years removed from the onset of COVID, pandemic-catalyzed shiftsin demand continue to drive uncertainty in the Phoenix office market. Users are scrutinizing theefficiency and sizing of their existing office space amid these shifting workplace strategies. Sometenants have opted to shrink and consolidate their footprints while others are no longer leasingbigger blocks of space in anticipation of future headcount growth. The structural lowering ofdemand has led to a more than 50% increase in the amount of vacant office space since 19Q4with 2023 marking an 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 | 16.1% | $29.61 | -680k | 810K |
| 4 & 5 STAR | 72M | 25.3% | $34.94 | -429K | 623K |
| 3 STAR | 85M | 12.8% | $28.04 | -48K | 187K |
| 1 & 2 STAR | 39M | 6.9% | $23.17 | -202K | 0 |