Phoenix Office Market Report
Return of Positive Absorption, Unwavering Net Migration Bolster Office Prospects
Class A leasing and company relocations fuel improvement. Influenced by economic volatility and remote work arrangements, a number of Phoenix office tenants reduced their footprints over the past year. These decisions heightened the volume of lease expirations and sublet space on the market, placing vacancy at its highest point in more than five years. Nonetheless, signs of recovery have emerged. During the first quarter of 2021, the metro registered positive absorption and the number of lease executions rose by 10 percent when compared with the same period last year. Class A leasing activity in Phoenix’s largest submarkets and commitments by corporate tenants as well as relocating West Coast startups helped to boost recent performance. Alliance Bank of Arizona inked two leases totaling 165,000 square feet in downtown Phoenix early this year while California-based firms Align Technology, Robinhood and RadNet Inc. each agreed to occupy more than 20,000 square feet in Tempe or the Airport Area.