• The Phoenix office market’s healthy fundamentals fueled from strong tenant demand put downward pressure on vacancy, which resulted in a rise in
    asking rental rates over the last year.
  • Net absorption in the fourth quarter totaled 975,866 sq. ft., resulting in 2.5 million sq. ft. of net absorption year to date. Year-end net absorption in
    2018 was above the markets long-term average of 1.9 million sq. ft. per year, yet slightly down from heightened activity one year earlier.
  • In Q4 2018, market-wide vacancy fell 120 bps over the last 12 months to 15.2%. Despite a substantial amount of deliveries, Class A vacancy increased
    only slightly by 40 bps year over year to 10.8%. Over the same period, vacancy fell most significantly among Class B properties, tumbling 170 bps to
    15.8%.
  • The market’s average asking rental rate at year-end was $26.55 per sq. ft. (FSG annual), a 4.2% annual increase. Average rent for Class A and
    Class B properties both increased 2.0% year over year to $35.32 per sq. ft. and $25.68 per sq. ft.,respectively.
  • During the fourth quarter, developers delivered 647,399 sq. ft. of office space, accounting for almost half of the deliveries during the calendar year. 
  • Approximately 2.6 million sq. ft. are under construction in the metro. Nearly 62% of the space underway is speculative development, which signals developer’s optimism in tenant demand.
  • Phoenix is projected to remain a top market for employment growth. Tenants will search the market for quality space in the most high-demand submarkets (Tempe and South Scottsdale) where employers can attract top talent.