Phoenix office market report

Q2 2024

25.0%

Total vacancy rate (%)

Phoenix's office vacancy remains among historically high levels at 25.0% in Q2 2024, driven by a notable increase in sublet vacancies, which rose to 5.3%—500 basis points higher than pre-pandemic levels in Q2 2019. Larger buildings, typically over 50,000 sf, generally show higher vacancy rates, reflecting ongoing challenges in the market. However, office buildings with smaller floorplates (below 10,000 square feet) remain healthy at 10.7% vacant. Some larger transactions, such as the Dutch Bros HQ for over 130k square feet, pose more certainty as companies grasp their new post-pandemic work models.

$31.33

Direct asking rents ($ psf)

Phoenix office asking rents continue to rise, registering at $31.33 per square foot annually in Q2 of 2024, despite a lack of demand and record-high vacancies. Landlords are juggling rising operating costs with inflation as well as the increase of construction costs and tenant improvements for larger Class A properties. As over 23 million square feet remain vacant on the market as of Q2 of 2024, the rate at which rents are increasing is decelerating when comparing quarters on a year-over-year basis.

$275.9M

Sales volume ($)

Investment sales in the Phoenix office market for both traditional and medical office space exceeded the last four quarters, reaching $275.9 million for Q2 of 2024. This marks a dramatic rise of 111.4% from the $130.5 million recorded in Q2 of 2023. Notable investments in Q2 2024 were made by groups like Columbus Properties and Breakwater Property Partners. More about key investors can be found on page 8.

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.