Phoenix Market Update: Office Pipeline Posts Modest Gains

December was a relatively calm month for Greater Phoenix in terms of office construction activity, according to CommercialEdge, with only one addition to the pipeline. More than 2.2 million square feet of office space were under construction across the metro, representing 1.7 percent of stock.

The Valley’s only office project that kicked off in December was health-care related. Irgens broke ground on Desert Harbor Medical Commons, a 43,873-square-foot medical office development in Peoria. The two-story building is taking shape at 9000 W. Thunderbird Road, some 2 miles from Banner Boswell Medical Center. Completion is slated for September 2022.

A year in review

December capped a slow and stable year of office developments underway across the metro, with some 952,000 square feet, or 43.2 percent of the total, added to the pipeline since January. Most projects will add traditional office space to The Valley’s inventory, which grew by 2.2 million square feet in 2021.

Last year’s largest new office development pertains to a RED Development mixed-use project in Phoenix. The developer started construction on the three-building, 281,480-square-foot office component of The Grove, a 15-acre property that will also include a self storage facility, luxury multifamily building and hotel. Phase I is slated for completion in the second half of 2022, with the hotel portion opening in the fall of 2023.

Also in 2021, the metro and the state saw an absolute first. A partnership led by Mortenson broke ground on The Beam on Farmer, Arizona’s first office building to feature a cross-laminated timber (CLT) primary structural system. The 184,000-square-foot project taking shape in Tempe has an estimated May 2022 delivery date.

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