The Metro Phoenix office market’s health continues to improve. Net absorption (job growth) of 2.93 million SF mirrored 2015 figures, which helped push vacancy down to 18.6% (from 19.5% at the end of 2015). Overall, lease rates are higher than they were a year ago with a current average of $24.34/SF Full Service. Rental rates still vary significantly between submarkets and product type so make sure you have a good broker (like Coppola-Cheney Group) to help you navigate any transaction you’re considering.
Below is a link to our Lee & Associates Arizona 4th Quarter Office Report and as usual, I’ve included my top 3 takeaways. BUT, this quarter I decided to add 2 bonus points to help you understand the market better.
1. North Scottsdale is hot again - North Scottsdale finished only second to Tempe in net absorption.
2. Small-Ball continues - Aside from a few large (100k SF+) deals, I continue to see a higher volume of smaller and medium-sized transactions in the market.
3. South Scottsdale got too tight for some tenants - Some tenants that wanted to expand in South Scottsdale, could not, and had to leave. This submarket remains one of the lowest vacancies in the Valley, and will backfill space quickly.
4. Camelback Corridor under 20% vacancy - This submarket, heavy with financial and professional services, lagged the market for the past few years but now is right in line with the Metro Market.
5. Class A vacancy fell to 17%, the lowest figure in all classes - These days, tenants still have the confidence to pay up for quality space with more amenities.
Have a question about where the market is heading as we roll into 2017? Email me or give me a call.