Phoenix Market Update: More Improvement in Vacancy Rate

The beginning of 2022 brought a healthy office leasing activity to the Greater Phoenix market, according to CommercialEdge. The metro’s vacancy rate clocked in at 14.9 percent in January, moving further away from the national average of 15.7 percent. The index was 40 basis points lower month-over-month and 350 basis points lower than in January 2021.

If compared to similar secondary markets, The Valley fared better than Atlanta, which had a 21.7 percent vacancy rate. In addition, for the first time in many months, the metro’s vacancy rate neared Charlotte’s index (14.7 percent).

When taking a closer look at the office submarkets with inventories larger than 7 million square feet, Scottsdale–Shea Corridor registered the highest vacancy improvement month-over-month, dropping from 12.8 to 11.0 percent. Phoenix South ranked second, with a 90-basis-point vacancy decrease.

Asking rents slightly decreased across the metro in January, despite the national average seeing a minor uptick when compared to December. The full-service equivalent listing was at $28.01 per square foot, down 6.7 percent month-over-month but up 3.2 percent year-over-year. The national rate was at $38.62 per square foot, 1.2 percent higher year-over-year.

Tempe’s 100 Mill had one of the priciest asking rate in the metro: $50.50 per square foot. The 18-story, 287,000-square-foot office building developed by Cousins Properties and Hines approaches completion, which is expected sometime in March. Amazon pre-leased a total of 158,000 square feet, or 55 percent of the development, with the first employee move-ins scheduled for the first half of 2022.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here.