Phoenix office leasing turns negative

Rendering of One Central Park East, downtown Phoenix
Rendering of One Central Park East, downtown Phoenix

[Source: Jan Buchholz, Phoenix Business Journal] — There is more office space than takers, according to CB Richard Ellis.  The company’s Phoenix office released its fourth-quarter statistics on office space with a footnote saying that for the first time in 28 years of tabulating such data, the metro area experienced “negative absorption.”  In other words, during the last three months of 2008 more office space came on the market than was leased out.  Currently there is about 600,000 square feet of additional vacant office space as compared to the end of 2007.  The lion’s share of the growing inventory is in Scottsdale and east Phoenix, according to CBRE.

The overall office vacancy rate across the Phoenix area is nearly 20%.  A vacancy rate of between 5 and 10% generally is considered a healthy state of equilibrium.  The 2008 vacancy numbers are up from 13.9 percent at the end of 2007.  Part of the negative absorption can be attributed to new office space delivered in 2008, about 7.3 million square feet.  Another 3.1 million was under construction at the end of the year, including CityScape and One Central Park East in downtown Phoenix.

Another sign of the times?  No projects broke ground during the past three months.  CBRE bases its office calculations on single and multi-tenant buildings larger than 10,000 square feet.  [Note: To read the full article, click here.]

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