Phoenix Office Market Report

Evolving tenant base supports recovery. Demand for space is firming as hiring moves from back-office roles toward higher-skilled positions. In 2025, Phoenix led the nation in job gains across finance, insurance, and administrative support sectors, reflecting a deepening need for office space. Technology growth is further shaping space requirements, illustrated by industrial AI firm Cognite relocating from Norway. As these companies adjust to hybrid work, many are using coworking locations as satellite offices, with the metro’s flex inventory more than doubling since 2024 to over 3 million square feet. These dynamics fueled one of the steepest vacancy declines among Sun Belt markets last year, and record enrollment at Arizona State University should continue to draw firms seeking skilled talent. Office hubs in Scottsdale, Tempe, and Chandler are poised to anchor this momentum as they offer lower costs and strong workforce access. Downtown Phoenix and the Camelback corridor may lag, given their legacy tenant mixes and older inventories, though a slower pace of move-outs points to stabilizing conditions.