Positive and Steady. That’s how I would describe the Metro Phoenix Office market’s performance for 2017. The market posted its 7th straight year of positive net absorption (net gain in office jobs) finishing at 1.83 million SF. For reference, our 25-year average is 2.5 million SF, and 2016 net absorption reached 2.9 million SF.
Across the US, there are many investors who think the market is nearing the end of the cycle. We may be, but it’s interesting to note that overall vacancy is currently 19.7%, and Metro Phoenix tightened to 12% just before the Great Recession. So like a lot of other voices in the market speculating, we believe the Metro Phoenix market has some significant runway to it.
Within the 19.7% overall vacancy is a wide range of vacancies between submarkets. This means that there are nuances and opportunities, for landlords and tenants, throughout the Valley.
Below is a link to our Lee & Associates Arizona 4th Quarter Office Report and as usual, I’ve included my top 3 takeaways:
The Big Winners Are – Instead of one dominating area, there were three submarkets (Camelback Rd Corridor, South Scottsdale and Chandler) that absorbed the most amount of space for all of 2017. They all posted between 250k and 300k SF of space leased.
Tenants Want Quality Buildings – 1.4 million SF of speculative office is under construction with good activity. Developers remain encouraged this space will get leased quickly since 60% of all net absorption in 2017 occurred in Class A properties.
Job Growth was Organic – A handful of leases over 100,000 SF (8 to be exact) were signed in 2017; with the biggest deal in Q4 totaling only 58,000 SF. With no giant transactions, this means a lot of our growth came from existing Metro Phoenix companies growing modestly.
My team and I represent office tenants and landlords throughout Metro Phoenix and the US – and we do some international work as well. Please contact me if we can help you. More info can be found at www.coppolacheney.com
PS – Click here to read a great article on technology in the brokerage business featuring Jeff Rinkov, CEO of Lee & Associates.
Click here to read the full report
Click here to enlarge