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Phoenix Market Reports

Phoenix Office Market

Average Asking Rent (Price/SF) $25.32
Vacancy Rate (%) 18.9
Net Absorption (SF) 479,691

The metro Phoenix office market finished 2017 with a total of 2,525,376 million square feet of positive absorption, marking the third consecutive year to post absorption topping 2.5 million square feet. The office market expanded by a total of 7,576,420 square feet over this time. The Tempe submarket led all submarkets with 690,000 square feet of occupancy gains for the year and remains the epicenter for much of the market's sustained growth. Tenants remain active and continue to relocate, expand and payroll; robust demand is expected to carry on into 2018. Looking ahead, six transactions greater than 100,000 square feet, are expected to take occupancy of close to 1.0 million square feet in the first quarter of 2018, highlighted by Centene (236,000 square feet) and Union Bank (170,000 square feet) moving into two new buildings in Tempe. Despite the continued growth of the inventory base, overall vacancy dropped to its lowest rate since 2008 to 18.9%, a 30-basis-point improvement quarter-over-quarter and a 90-basis-point improvement year-over-year. The Class A market remained the tightest with a 17.9% overall vacancy, while Class B vacancy tallied 20.1% at the end of 2017.

Phoenix Industrial Market

Average Asking Rent (Price/SF) $0.61
Vacancy Rate (%) 9.5%
Net Absorption (SF) 3,146,756

Strong market fundamentals continued to place downward pressure on the metro Phoenix industrial market's overall vacancy, which finished the third quarter of 2017 at 9.2%, down 110 basis points from a year ago and the lowest level since 2007. Net absorption topped a robust 3.1 million square feet in the third quarter, bringing the year-to-date total to nearly 7.3 million square feet. The continued trend of large tenants taking large warehouse/distribution space continued, as that product type accounted for 71.4%, or 2.2 million square feet, of the quarter's total absorption figure. Large tenants that took occupancy during the quarter include: Conair (1.0 million square feet), at its recently completed facility in Glendale; Essendant (262,000 square feet), in Southwest Phoenix; and SanMar (253,000 square feet), in Avondale.

Phoenix Office Market Report
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Phoenix Industrial Market Report
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