View of the Phoenix Medical Office Market
Leasing Activity
Leasing held mostly steady in Q3 2026. Direct vacancy edged up to 15.2% from 15.1%, and average direct rents slipped to $34.21/SF from $34.39/SF on a full-service basis. Even so, rents remain about 5% higher than they were a year ago. Net absorption stayed positive for a second straight quarter at 38,803 SF, down from 60,076 SF in Q2, with most of the gain coming from sublease space. Leasing volume totaled 146,187 SF across 46 deals, meaning slightly more deals but smaller ones. Northwest Phoenix and Midtown led the way, while Central Scottsdale gave back the most space.
Sales Activity
Sales activity slowed in Q3 2026 after a busy second quarter. Total sales volume came in at $64.1 million, down from $151.8 million in Q2 but well ahead of the $41.5 million recorded in Q3 2025. The difference was deal size, as this quarter saw more transactions at smaller price points. The largest sale was 10752 N 89th Pl in Scottsdale, a two-property deal that traded for $25.5 million, or roughly 40% of the quarter’s volume. One Scottsdale Landing followed at $10.75 million, and Plaza Medical Center II in Peoria sold for $8.5 million. Cigna also sold two West Valley buildings, one of them to a charter school. Year-to-date volume is now near $300 million, close to last year’s full-year total with a quarter still to go.
Construction
For the second quarter in a row, no new medical office buildings were delivered to the market. The last new project was a 68,000 SF building that came online in Q1 2026. Total inventory did grow to about 17.8 million SF, but that increase came from existing buildings being added to the tracked data, not from new construction. The pipeline is holding steady, with 8 buildings totaling roughly 405,000 SF under construction, nearly unchanged from last quarter. Developers remain selective, and high building costs mean most projects still need committed tenants or strong preleasing before breaking ground. With little new space arriving in the near term, well-located existing buildings should remain in a strong position to hold occupancy and support rents.
Q3 2026 Market Snapshot
17.8M SFtotal inventory |
15.2%direct vacancy rate |
146.2K SFleased |
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$34.21avg direct rent per SF |
$64.1Msales volume |
$25.5Mlargest quarterly transaction |
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Market Breakdown
| Q2 2026 | Q3 2026 | Quarterly Change | |
|---|---|---|---|
| Direct Vacancy Rate (%) | 15.1% | 15.2% | ▲ 0.1% |
| Direct Rental Rate | $34.39 | $34.21 | ▼ $0.18 |
| Sold ($) | $151.8M | $64.1M | ▼ $87.7M |
| Net Absorption (SF) | 60,076 | 38,803 | ▼ 21,273 |
Market Trends
Lease Rate and Vacancy
Net Absorption and Lease Volume
Sales Volume and Sale Price/SF
Phoenix Submarket Statistics, Q3 2026
| Submarket | Total Inventory SF | Direct Rental Rate | Direct Vacancy Rate | Total Available Rate | Total Net Absorption | Total Leasing SF | Sales Volume |
|---|---|---|---|---|---|---|---|
| Airport Area | 110,187 | $24.00 | 27.8% | 27.8% | 8,858 | 0 | – |
| 44th Street Corridor | 98,685 | $24.01 | 53.4% | 53.4% | 13,685 | 0 | – |
| Arrowhead | 1,481,904 | $36.45 | 9.8% | 16.5% | (17,890) | 8,121 | – |
| Camelback Corridor | 422,261 | – | 7.9% | 23.5% | (1,945) | 0 | – |
| Central Scottsdale | 1,801,014 | $34.30 | 26.6% | 25.5% | (56,229) | 22,054 | $25,500,000 |
| Chandler | 967,842 | $37.30 | 11.6% | 12.6% | (9,102) | 8,802 | – |
| Deer Valley/Airport | 1,280,870 | $30.58 | 22.2% | 25.7% | (3,768) | 25,286 | $5,800,000 |
| Downtown | 44,510 | $21.31 | 14.7% | 14.7% | (1,619) | 0 | – |
| Gateway Airport/Loop 202 | 1,190,730 | $52.04 | 11.4% | 19.6% | 29,381 | 2,698 | – |
| Glendale | 813,773 | $40.90 | 5.3% | 10.8% | 3,517 | 1,327 | $3,800,000 |
| Loop 303/Surprise | 744,930 | $32.43 | 7.1% | 9.3% | 23,468 | 7,778 | – |
| Mesa Downtown | 26,734 | – | 0.0% | 0.0% | 0 | 0 | – |
| Mesa East | 288,076 | $23.13 | 12.7% | 12.2% | (2,851) | 0 | $5,200,000 |
| Midtown | 681,141 | $25.60 | 14.8% | 14.8% | 46,109 | 8,055 | – |
| Midtown/Central Phoenix | 1,154,169 | $28.09 | 16.2% | 13.7% | (37,789) | 0 | – |
| N Phoenix/Cave Creek | 26,871 | $29.19 | 9.1% | 0.0% | 0 | 0 | – |
| North I-17 | 141,961 | $33.51 | 15.2% | 19.0% | 0 | 0 | – |
| N Scottsdale/Carefree | 96,701 | $26.97 | 18.6% | 10.2% | 0 | 8,114 | – |
| Northwest Phoenix | 1,088,857 | $22.56 | 22.9% | 30.6% | 53,123 | 8,074 | $10,350,000 |
| Paradise Valley | 911,248 | $32.45 | 17.8% | 23.8% | (6,815) | 3,649 | – |
| Piestewa Peak Corridor | 199,886 | – | 18.4% | 27.5% | 1,513 | 1,513 | – |
| Pinal County | 285,739 | $24.53 | 1.6% | 15.0% | 985 | 985 | – |
| Scottsdale Airpark | 702,759 | $40.95 | 8.7% | 14.7% | 6,103 | 1,729 | $10,750,000 |
| Scottsdale South | 497,768 | $29.93 | 4.7% | 6.1% | 1,704 | 1,704 | – |
| South Tempe/Ahwatukee | 431,855 | $29.68 | 16.4% | 16.3% | 963 | 1,455 | – |
| Southwest Phoenix | 83,393 | $22.86 | 6.3% | 6.3% | 0 | 0 | – |
| Superstition Corridor | 1,323,918 | $36.66 | 21.0% | 22.6% | (26,663) | 9,214 | – |
| Tempe | 341,625 | $27.44 | 7.3% | 7.3% | (2,281) | 0 | $2,740,000 |
| West I-10 | 515,875 | $44.43 | 8.3% | 8.7% | 16,346 | 25,629 | – |
| Phoenix Avg/Totals | 17,755,282 | $34.21 | 15.2% | 18.54% | 38,803 | 146,187 | $64,140,000 |
Frequently Asked Questions
What is the Phoenix medical office vacancy rate in 3Q 2026?
Direct vacancy in the Phoenix medical office market edged up to 15.2% in 3Q 2026 from 15.1% in 2Q 2026.
What are average medical office rents in Phoenix?
Average direct rents slipped to $34.21/SF from $34.39/SF on a full-service basis in 3Q 2026. Rents remain about 5% higher than they were a year ago.
What was net absorption for Phoenix medical office space in 3Q 2026?
Net absorption was 38,803 SF, positive for a second straight quarter but down from 60,076 SF in 2Q 2026. Most of the gain came from sublease space.
How much medical office space was leased in Phoenix in 3Q 2026?
Leasing volume totaled 146,187 SF across 46 deals, slightly more deals but smaller ones. Northwest Phoenix and Midtown led the way, while Central Scottsdale gave back the most space.
How much did Phoenix medical office sales total in 3Q 2026?
Total sales volume was $64.1 million, down from $151.8 million in 2Q 2026 but well ahead of the $41.5 million recorded in 3Q 2025. Year-to-date volume is near $300 million, close to last year’s full-year total.
What was the largest Phoenix medical office sale in 3Q 2026?
The largest sale was 10752 N 89th Pl in Scottsdale, a two-property deal that traded for $25.5 million, or roughly 40% of the quarter’s volume. One Scottsdale Landing followed at $10.75 million, and Plaza Medical Center II in Peoria sold for $8.5 million.
Was any new medical office space delivered in Phoenix in 3Q 2026?
No. For the second quarter in a row, no new medical office buildings were delivered. The last new project was a 68,000 SF building that came online in 1Q 2026.
How much medical office space is under construction in Phoenix?
The pipeline includes 8 buildings totaling roughly 405,000 SF under construction, nearly unchanged from last quarter. Most projects still need committed tenants or strong preleasing before breaking ground because building costs remain high.
How large is the Phoenix medical office market?
Total inventory grew to about 17.8 million SF in 3Q 2026. The increase came from existing buildings being added to the tracked data, not from new construction.
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The information in this update was composed by the Kidder Mathews Phoenix healthcare brokerage team of Michael Dupuy, Fletcher Perry, Rachael Thompson, Perry Gabuzzi, Chad Sutton, and Zack Harris.
Data source: Kidder Mathews and CoStar
About the Team
The Kidder Mathews team of Michael Dupuy, Fletcher Perry, Rachael Thompson, Perry Gabuzzi, Chad Sutton, and Zack Harris specializes in healthcare real estate services with a strategic focus on the greater Phoenix region. For more information, visit their online team profile here.
About Kidder Mathews
Kidder Mathews is the largest fully independent commercial real estate firm in the Western U.S., with over 900 professionals in 20 offices across Washington, Oregon, California, Nevada, Arizona, and Texas. We offer a complete range of brokerage, appraisal, asset services, consulting, and debt & equity finance services for all property types. For more information, visit kidder.com.
Contact
Michael Dupuy, Executive Vice President
Fletcher Perry, Executive Vice President
Rachael Thompson, Senior Vice President
Perry Gabuzzi, Executive Vice President
Chad Sutton, Senior Associate
Zack Harris, Senior Associate
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty, or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. Consult your attorney, accountant, or other professional advisor.
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