Office Leasing Activity Slows Down in Phoenix

After several months of improvement, leasing activity slowed down across the Greater Phoenix office market. According to CommercialEdge, the metro’s vacancy rate grew to 15.5 percent in February, remaining once again near the national average of 15.7 percent. The index was 60 basis points higher month-over-month, but 280 basis points lower compared to the same point in 2021.

When put against similar secondary markets, The Valley fared better than Atlanta, which had a 22.3 percent vacancy rate. In addition, for the second month in a row, the metro’s vacancy rate stayed close to Charlotte’s index (15.2 percent).

In terms of asking rents, both the metro’s index and the national average saw no change month-over-month. The Valley’s full-service equivalent listing held steady at $28.01 per square foot, up 3.2 percent year-over-year, while the national rate was at $38.62 per square foot, 1.2 percent higher year-over-year.

Most of the office submarkets with inventories larger than 7 million square feet recorded rises in office vacancy. Phoenix–Central Business District had one of the highest increases month-over-month, with vacancy rising from 19.6 to 24.0 percent. At the other edge of the spectrum was Tempe, the metro’s largest office submarket, that saw a mere 10-basis-point vacancy increase when compared to January.

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