Metro Phoenix’s real estate woes spread to commercial market
[Source: Peter Corbett, Arizona Republic] — …In the second quarter, metropolitan Phoenix experienced a negative absorption of office space for the first time in 20 years, according to a CB Richard Ellis market report released last week. That means that instead of tenants filling more new office space, the market actually had less space occupied. In this case, the negative absorption was 171,278 square feet. Office vacancies hit 16.3% in the quarter ending June 30, up from 13% a year ago.
- Central Phoenix, with 1 million square feet of office space under development, is gaining some renewed vitality in the office sector with development of ASU’s downtown campus and the Metro light rail scheduled to start service by year’s end… Office vacancies in downtown Phoenix were at 13% in the second quarter.
- Scottsdale’s overall vacancy rate was 17.7%. But there has been a huge spike in office vacancies in the past two years. Central and southern Scottsdale have been less volatile, but vacancy rates are up about 5% in both areas over the past two years.
- West Phoenix, a relatively small office market, has a vacancy rate of 37%.
- Southeast Valley’s rate is 19%.
Building owners are offering concessions, and there has been fierce competition to land tenants, said Jerry Noble, a CB Richard Ellis senior vice president who tracks office market. Lease rates for the Valley’s existing office space fell to $25.71 in the second quarter from $25.95 at the end of the first quarter. [Note: To read the full article, click here.]
