After an encouraging July, Phoenix’s office vacancy rate kept bettering in August, according to CommercialEdge information. The average rate dropped to 17.2 percent, marking a 50-basis-point decrease month-over-month and a 30-basis-point drop when compared to August 2020. However, the value continued to remain higher than the national rate of 15.4 percent.
As no new construction was added to the metro’s inventory in August, the vacancy decrease shows the Phoenix office market advancing on the road to recovery. If put against secondary markets similar in business climate and total stock, the metro maintained the same middle-ground position between Atlanta (19.7 percent vacancy rate) and Charlotte (15.3 percent).
When looking at submarkets with at least 4 million square feet of inventory, few of them manifested significant changes in office vacancy month-over-month, such as Scottsdale–Airpark (80 basis points) and Phoenix–Central Business District (70 basis points).
The best performing submarkets in terms of vacancy remained Tempe–Mill, with a 4.6 percent vacancy rate, followed by Mesa, with 7.7 percent. Tempe, the largest office submarket with an inventory of 14.8 million square feet, had a slight rise in vacancy, moving from 14.1 to 14.8 percent.
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