[Source: Phoenix Business Journal] — Nearly 2.8 million square feet of new office space is under construction in the Phoenix metro area even though absorption rates ran into the negative category during the first quarter of 2009, according to a report released Monday by Colliers International. Absorption, the net new amount of leased space compared to the previous period, was a negative 497,720 square feet, Colliers reported. That means given all of the office space available in the Phoenix area, nearly 500,000 square feet of vacant space came back into the inventory during the first three months of the year. That negative absorption likely will continue as major office projects come on the market in the next 12 to 18 months, the firm said.
Two of the largest projects under construction are in downtown, which will see more than 1 million square feet of new office space: Central Park East and the Wachovia Tower (part of the CityScape project).
Phoenix-area office vacancies are lowest in downtown’s central business district at 14.6 percent. Rates are the highest in the northeast Valley at 23.1 percent. Overall vacancy rates rose to 19.9 percent, compared to 19.1 percent at year end. Rents are dropping in response to increased supply with the average at $24.72 per square foot annually compared to $25.54 in the fourth quarter. [Note: To read the full article, click here.]