Want to know the latest trends in the Phoenix Office market? Here’s what’s going on: Our first quarter Office Market Report was just released this week with some interesting stats. We had an excellent quarter for net absorption, the most important measure of the market’s health. We absorbed 727,000 SF, and if we keep that pace up, 2014 absorption will more than double 2013’s figure of 1.3 million SF. Landlords need this pace desperately to break the 20% vacancy threshold. Once below 20%, the market will begin to see increases in rental rates across the market.
Below is the link to our first quarter report and my three takeaways below:
1. There is almost 2 million SF of new office product under construction. Only 18% of it is speculative, the rest are build-to-suits.
2. All of the new construction is in Chandler or Tempe, except for SkySong in Scottsdale, which Craig and I lease. The Southeast Valley continues its early domination for tenants in this cycle.
3. Vacancy is still 22%; continuing to cause downward pressure on rents in general. If we absorb approximately 2 million SF or more in 2014, we will break into 19% vacancy range and begin to see a different Phoenix office market.
We have some wind at our backs here in Phoenix; let’s see how strong it stays in 2014.
For the entire report, click here.