Phoenix Office Market Report

Small footprints still a defining feature as firms adapt to flexible work models. Offices between 10,000 and 50,000 square feet maintained sub-8 percent vacancy ending last year, noticeably below the metro average. At the same time, just 410,000 square feet of new supply is slated for 2025 — far lower than the 2 million square feet delivered annually from 2015 to 2019. This slowdown helps counterbalance the lingering inventory of larger blocks generally exceeding 100,000 square feet, which had elevated sublease availability in prior years. Post-pandemic, a net of 3.6 million square feet of office space has been vacated as major tenants increasingly rightsize, with half vacating in the past 18 months. Yet, Class B/C offices under 50,000 square feet stand out, drawing firms seeking flexibility and functionality. Maricopa County’s position as a top population growth market continues to bolster the local workforce, though smaller space-per-employee ratios persist. Ongoing in-migration and corporate expansions underscore an enduring demand trend, placing Phoenix’s office sector on a path toward modest improvement.