Office Market
Office vacancy in Phoenix continues to climb steadily as the third quarter begins. Many tenants are reevaluating their space utilization, often leading to downsizing or closures. Moreover, job growth in sectors that typically require office space has been slow for over two years. This structural decline in demand has driven vacancy rates up by more than 550 basis points since Q4 2019. With pre-pandemic leases set to expire, vacancies are expected to rise further in the midterm.
| SUB-MARKET | TOTAL SF AVAILABLE | VACANCY RATE | MARKET RENT | NET ABSORPTION SF | UNDER CONSTRUCT SF |
|---|---|---|---|---|---|
| TOTAL: | 198M | 16.8% | $29.48 | -894K | 945K |
| 4 & 5 STAR | 68M | 26.9% | $34.03 | -236K | 526K |
| 3 STAR | 91M | 13.1% | $28.72 | -469K | 419K |
| 1 & 2 STAR | 38M | 7.4% | $23.07 | -190K | 0 |