The Phoenix office market is experiencing historically high vacancy at 16.8 percent, reflecting weak demand, corporate downsizing, and an influx of new deliveries over recent years. Net absorption remains negative as tenants continue to reduce space, and sublease availability has risen to 3.6 percent of total inventory. Class A properties in prime locations are performing better, while older suburban buildings face steep competition and downward pricing pressure.
Leasing activity is subdued and primarily concentrated in smaller deals under 10,000 square feet, often driven by medical, financial, and government tenants, while large leases remain rare. Average asking rents have declined to $28.92 per square foot and are expected to remain flat or negative through 2025. Construction has slowed sharply, with most new projects being build-to-suit or preleased, and overall vacancy stabilization will depend on an improvement in tenant demand rather than construction restraint alone.
For a deeper dive into the evolving dynamics of the Phoenix office market, including detailed projections and expert analyses, view the full newsletter below, where you can download and share additional insights.
