Office Market
Office vacancy rates in Phoenix continue to climb steadily as the fourth quarter begins. Businesses are increasingly reevaluating their space needs, often leading to downsizing or closures. Compounding this trend, job growth in traditional office-using sectors has remained sluggish for over two years. This sustained drop in demand has driven vacancy rates up by more than 550 basis points since Q4 2019. Further increases are anticipated in the midterm as pre-pandemic leases reach expiration.
| SUB-MARKET | TOTAL SF AVAILABLE | VACANCY RATE | MARKET RENT | NET ABSORPTION SF | UNDER CONSTRUCT SF |
|---|---|---|---|---|---|
| TOTAL: | 197M | 16.7% | $29.43 | 336K | 760K |
| 4 & 5 STAR | 69M | 27.1% | $34.56 | 235K | 602K |
| 3 STAR | 91M | 12.7% | $28.03 | 221K | 158K |
| 1 & 2 STAR | 38M | 7.5% | $23.28 | -121K | 0 |