The Q1 2025 Phoenix Office Market Report by Colliers is here, and while much of the valley’s office scene is still feeling the sting of high vacancies and soft demand, one submarket isn’t just surviving — it’s thriving.
Yep, Chandler, this is your moment. Stand up!
Let me break it all down for you, quick and easy.
🧊 Market Absorption: Still Negative, But Way Less Brutal
We closed the first quarter of 2025 with -96,714 square feet of net absorption. That means more space was vacated than leased, which isn’t ideal — but it’s a big step up from last year’s -627,000+ SF black hole.
Chandler was the standout performer, delivering 266,540 SF of positive net absorption. That’s not just a win — it’s a market-leading flex.
📈 Vacancy Rises Slightly, But Subleases Drop
Vacancy crept up to 15.6%, which is 0.3% higher than last quarter and 0.5% more than this time last year.
But here’s the good news: sublease availability is finally shrinking. It dropped for the fourth quarter in a row, now sitting at 6.6 million SF — down 1.1 million SF compared to Q1 2024. The market is tightening, slowly but surely.
💵 Rents Are Holding — Especially Class A
Average asking rent softened slightly to $29.68/SF, a 0.64% drop year-over-year.
But Class A space is still going strong. Rents rose 2.27% YoY, hitting $33.85/SF. If you’re in the Camelback Corridor, get ready to pay up — it’s still commanding the highest Class A rents at $42.12/SF.
🏗️ New Supply: Just a Drip
Only 149,177 SF of new space was delivered this quarter, and most of that was already leased by Northrop Grumman at Gilbert Spectrum – Building 3.
Under construction? Just 647,164 SF across the entire metro — a historically low number. More than half is in Paradise Valley, where Fender and Republic Services are building their new HQs.
🔁 Office-to-Industrial Conversions Are Picking Up Steam
A trend to watch: developers are buying outdated office buildings and turning them into industrial space. That’s exactly what’s happening at the 223K SF Elliot Center in Tempe — it’s being demolished to make way for Nexus Commerce Center, a new industrial park.
If it doesn’t lease, maybe it transforms.
💸 Sales Slowed, But Still Positive YoY
Office investment sales hit $229 million in Q1 — down nearly 59% from Q4, but still up 21.4% YoY.
Big deals included:
- Copper Point in the Gateway/Loop 202 area, sold for $36M
- Amkor HQ in South Tempe, sold for $22M
Investors are still active — just a little pickier.
🔮 Outlook: Deals Are Brewing, But They Take Time
There’s optimism out there. Larger tenants (25K–100K SF) are circling the market again, but deals are moving slower, thanks to global uncertainty (hello, tariffs 👋).
Owner-users and value hunters are also making moves, especially if they can snag buildings under $100/SF. That’s where the upside lives.
👏 Final Thoughts: Chandler’s Glow-Up Is Real
The Phoenix office market still has a ways to go — but Chandler is officially back on top. Absorption is strong, leasing is hot, and big names are planting deeper roots in the East Valley.
If you’re an investor, tenant, or just curious what these trends mean for your next move, you know where to find me.
AriZona Real Estate insider! 
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