Phoenix CRE Market Update: Office Occupancy on the Rise

by Adriana Marinescu

November was another good month for the Greater Phoenix market as office vacancy once again trended downward. According to CommercialEdge data, average vacancy decreased to 14.7 percent, marking a 250-basis-point drop year-over-year. By comparison, the national rate stood at 15.2 percent, 140 basis points higher than recorded in November 2020.

As vacancy dropped, asking rents rose across the metro. The full-service equivalent listing rate clocked in at $28.01 per square foot in November, up 320 basis points year-over-year. The value was 27.5 percent lower than the national rate of $38.62 per square foot.

Compared to similar secondary markets, the Valley occupied the same middle ground it had held for the previous few months: The metro fared better than Atlanta (20.7 percent vacancy) yet not so well as Charlotte (14.3 percent).

Surveying submarkets with inventories larger than 10 million square feet, we find Tempe ranking well above the metro’s average rate at 10.7 percent vacancy. On the other end of the spectrum, Phoenix – Central Corridor, with 10.8 million square feet in its office inventory, reached 25.4 percent vacancy.

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