Phoenix Market Update: Vacancy Heads the Right Way

Greater Phoenix’s office vacancy dropped at 17.9 percent in May, according to CommercialEdge data, after a slow and steady rise throughout the first four months of 2021. Although higher than the national rate of 15.6 percent, the value marks an 80-basis-point decrease month-over-month and is up by 60 basis points year-over-year.

When compared to vacancy rates in similar secondary markets on the upswing, the metro’s fared better than Atlanta (19.6 percent vacancy rate) but trailed Charlotte (12.9 percent).

Encompassing roughly 14.8 million square feet of space across 157 properties, Tempe is Phoenix’s largest office submarket and one of the better performing ones in terms of leasing, with an average vacancy rate of 15.8 percent. The value is bound to decrease even more, as Tempe had no office projects under construction as of May.

Although bearing a 22.5 percent vacancy rate, 460 basis points higher than the metro’s average value, Phoenix’s central business district witnessed downtown area’s largest office lease since the onset of the pandemic. In mid-May, Snell & Wilmer signed a 115,000-square-foot lease at CityScape, RED Development’s 1.2 million-square-foot mixed-use tower.

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