Phoenix Market Update: Slow and Steady Progress

Some 2.5 million square feet of office space was underway across the metro as of March, only a 3.3 percent uptick from February, according to CommercialEdge data.

Standard Market Update imageGreater Phoenix’s office development activity kept going at a slow and steady pace in March, with few square feet added to the pipeline when compared to February. According to CommercialEdge information, there were 17 office projects totaling nearly 2.5 million square feet under construction across the metro, marking only a 3.3 percent uptick. Most developments are slated to come online by year’s end, with only two projects scheduled for delivery in 2022.

Medical office space represents 28.5 percent of new supply, with roughly 705,000 square feet across four projects, as the metro continues to attract investors in health-care, biosciences and life science industries. One of the largest medical projects underway is the U.S. Department of Veterans Affairs outpatient health clinic at 400 N. 32nd St. in the Phoenix – Center City submarket. Upon the 2022 completion, the 275,157-square-foot clinic will be one of the largest VA facilities in the country.

While the Tempe submarket led construction activity as of March, with more than 660,000 square feet of office space underway, the largest development is taking shape in Chandler. Douglas Allred Co. broke ground on two speculative office buildings totaling 300,000 square feet in June, funding the construction with a $74 million financing package from Bank OZK. Completion is expected this October.

Another large development is the 287,000-square-foot One Hundred Mill project coming online in the Tempe–Mill submarket, a 19-story development to include 279,500 square feet of office and 7,500 square feet of retail space. Cousins Properties and Hines are developing the Class A building where Amazon signed a 95,000-square-foot lease, part of the company’s Phoenix Tech Hub expansion.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here. We included properties of 25,000+ square feet in our research.

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