• Vacancy increased quarter-over-quarter for the first time in two years to 14.4% in Q1 2020, up from the year-end total of 14.1%.
  • Year-over-year vacancy decreased 60 basis points from 15.0% in Q1 2019.
  • The Phoenix office market weathered a slow March and started the year off on an encouraging note. Phoenix had positive net absorption for the 39th straight quarter with 340,411 sq. ft. in Q1 2020.
  • There is currently 2.3 million sq. ft. of construction underway across metro Phoenix, up from the year-end total of 2.0 million sq. ft.
  • The Phoenix office market delivered 544,456 sq. ft. of new space in Q1 2020, down slightly from the Q4 2019 total of 558,731 sq. ft.
  • Of the total space delivered in Q1, the Tempe submarket represented 82%, or 444,942 sq. ft.
  • The demand for office space in the Valley is strong, creating strong market rates across all classes.
  • The average full service gross (FSG) asking lease rate increased to $27.50 per sq. ft. from $27.00 per sq. ft. in Q4 2019.
  • The Class A asking rate increased $0.57 from the prior year to $36.06 per sq. ft. Comparatively, Class B office rates saw an increase year-over-year to $26.67 per sq. ft. FSG, $0.70 higher than in Q1 2019.
  • Overall vacancy increased 30 bps to 14.4% from the 12 year low Q4 2019 total of 14.1%. 
  • Aside from the year-end 2019 rate, vacancy remains low overall, and is at its second lowest point since Q4 2007 when the vacancy rate was 13.9%