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Phoenix Office Market Report

3rd Quarter 2019

Posted In — Market Research | Market Report

By any measure, the Phoenix office market is thriving and performing at the highest levels, with record breaking stats across the board at the end of the third quarter. Asking rental rates held firm from second quarter’s post-recession record high, which had marked the 30th consecutive quarter of positive rent growth. The overall county’s vacancy rate hit a record low in the third quarter, which subsequently led to occupancy rates hitting a record high at levels the market hasn’t experienced in over 10 years. Availability rates have not wavered much in the past few quarters and hold steady at nearly the post-recession record low. Both leasing and sales activity were strong in the third quarter and development activity has ramped up in the past few years, projecting to reach a post-recession record high in deliveries by the end of this year. With such solid fundamentals, Phoenix continues to attract the attention of office investors and users alike, as strong growth in office-using employment continues to drive the demand for office space. Population growth, a large and growing talented labor pool, diverse economy, and an attractive cost of living and doing business have helped to strengthen the value of the metro. Overall employment growth remains positive, as the Phoenix unemployment rate currently stands at 4.3% as of July, now 600 basis points lower than the peak high of 10.3% in November 2009. Over the past four quarters, the Phoenix metro added over 64,000 jobs as well as maintained its position as one of the top markets in the country for job growth over the last several years.

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