The Phoenix office market has maintained its position as one of the nation’s leaders in investment, with active sales activity placing it second across similar Sun Belt metros. According to CommercialEdge data, Phoenix’s office market performance in various segments is noteworthy.
Office Deal Volume
Phoenix ranked second among Sun Belt metros in terms of total investment volume in 2023, with $1.1 billion, behind the Bay Area ($1.3 billion) and ahead of Denver ($1 billion). In the first two months of 2024, Phoenix continued to rank second with $139.6 million in investment volume, following the Bay Area’s $371.6 million. This sustained high ranking underscores Phoenix’s robust investment appeal within the Sun Belt region.
Office Construction
Phoenix has one of the smallest construction pipelines among Sun Belt metros. As of February 2024, the metro had 940,968 square feet of office space under construction across 16 properties, accounting for 0.6% of the existing inventory. This is significantly lower compared to other Sun Belt cities, where Dallas leads with 6.7 million square feet, followed by San Diego (5.5 million square feet) and Austin (4.3 million square feet). Despite the lower construction volume, notable projects are underway, including:
- Verde Investments’ Tempe Vale: A 132,972-square-foot Class A building scheduled for delivery by May 2024.
- Gilbert Spectrum’s Building 3: A 119,222-square-foot Class A building expected to be completed in May 2024.
- One Scottsdale Medical: A 101,136-square-foot medical office space scheduled for completion in September 2024.
Office Vacancy
Phoenix’s office vacancy rate stood at 17.9% as of February 2024, matching the national average. This rate is lower than other major Sun Belt cities like Houston (24.5%), Denver (22.1%), Austin (22.1%), and Dallas (21.1%). The stable vacancy rate indicates a balanced demand and supply in the Phoenix office market.
Coworking Space
In the coworking sector, Phoenix lags behind other major Sun Belt markets. The metro’s flex office inventory comprises 1.2 million square feet, compared to Dallas (2.5 million square feet), Atlanta (2 million square feet), Houston (1.8 million square feet), and the Bay Area (1.8 million square feet). The share of coworking space as a percentage of total office space in Phoenix is 1.5%, below the national average of 1.7%. Despite this, the coworking sector in Phoenix continues to grow, with notable expansions such as Industrious opening its sixth Arizona location in Scottsdale.
Phoenix remains a strong performer in office investment among Sun Belt metros despite a slowdown in construction and a relatively smaller coworking space inventory. The city’s strategic growth and stability make it an attractive destination for investors and businesses alike.
Information above by Simona Tudose titled: Phoenix Office Deal Volume Among Largest in the Nation
2nd pg. Spanish.
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