Phoenix office market report

Q4 2024

24.8%

Vacancy drops from the prior quarter as sublease space decreases.

In recent quarters, the Phoenix office market has struggled to balance its growing supply as demand has shifted toward smaller office spaces, leaving larger suites in downtown and other business hubs increasingly vacant. However, Q4 marked a turning point with the first decline in vacancy in recent quarters. Vacancy rates dropped by a modest 90 basis points from Q3, including several larger leases in the 40,000 to 60,000 square foot range (see page 7 for top transactions).

222,658 sf

Q4-24 marks the first quarter of positive net absorption recorded in 3 years.

Absorption in Phoenix has shown a positive turn in Q4 2024, following several quarters of negative net absorption. This shift is primarily attributed to increased activity in larger property sizes, which contrasts with the post-pandemic trend. The increase in absorption, particularly in the Northwest Phoenix and East Valley submarkets, signals a potential market turning point, although the long-term outlook remains uncertain.

$337M

Investment sales pick back up at year-end 2024 as interest rates come down.

Phoenix office investments totaled $337 million this quarter, bringing the year-to-date (YTD) total for 2024 to $945 million, a 133% increase compared to 2023. Key deals include 24th at Camelback II (306,877 SF) for $97.9 million, 7272 Old Town (158,556 SF) for $42.3 million and Camelback Lakes (136,450 SF) for $30.8 million as part of a portfolio. There’s a consistent investor interest in properties over 50% leased.

DOWNLOAD PHOENIX OFFICE MARKET REPORT

Your source for the latest Phoenix office market reports

Get in-depth office market reports and insights from commercial real estate experts in the Greater Phoenix area. Avison Young advisors look at Phoenix commercial real estate activities and the latest Phoenix statistics to provide you expert market research on Phoenix's office properties.

Explore different topics like the latest office market pricing trends and analysis of Phoenix's current office real estate market conditions. Gain a better understanding of Phoenix’s office real estate outlook and stay ahead of current office space trends. Make smart decisions when it comes to investing in office properties in Phoenix's competitive office real estate market. Avison Young is your trusted source for commercial real estate office market insights in Phoenix.