Phoenix saw the addition of another -626,861 SF of net vacant office space to the market in 23Q3 as tepid demand and broad-based economic uncertainty continued to pressure the sector. Total empty space has climbed nearly 50% since the end of 2019, driving the metro-wide vacancy rate from 11.0% in 19Q4 to 15.8% in 23Q3, matching a level last seen in 2015. However, over the past 12 months, the metro recorded a 4.38% increase in average asking rents, ranking the Valley as one of the best-performing markets in the country.

Phoenix remains top in the nations among markets for employment growth recording more than 40,200 job additions in the trailing 12-month period ending August 2023. The labor market now has 152,500 more jobs than before the pandemic. While labor is the primary driver behind the market’s business attraction success, relative affordability, and a more accommodating regulatory environment help tip the scale in favor of Phoenix when companies make their site selection decision. Click below for more highlights on the Phoenix Office and Office Condo markets in the third quarter of 2023.