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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 (%) 9.3%
Net Absorption (SF) 2,108,243

Demand stayed strong to finish the year with a total of 2,108,243 square feet of positive absorption recorded in the fourth quarter, marking the 12th consecutive quarter of positive absorption. The Southwest Phoenix submarket posted 1,240,739 square feet of positive absorption, or 58.9% of the market's quarterly total, as Amazon (474,000 square feet), California Closets (302,600 square feet) and Cardinal Glass (250,000 square feet) all took occupancy during the quarter. The Glendale submarket expanded with the addition of UPS (618,350 square feet) at PV|303 along the recently completed Loop 303 freeway. Net absorption for the year finished at a record 9,150,789 square feet, the largest annual gain since 2005, mostly attributed to large warehouse/distribution space in the Southwest Phoenix and Glendale submarkets and high-tech and data center developments in the Sky Harbor and Chandler submarkets. Despite the addition of more than 7.3 million square feet to the market's inventory over the past year, healthy leasing activity and strong market fundaments have caused the vacancy rate to drop 80 basis points to 9.3% and is expected to decline further in the coming quarters.

Phoenix Office Market Report
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Phoenix Industrial Market Report
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