Office vacancy rates in metro Phoenix hit record

Rendering of One Central Park East, downtown Phoenix

[Source: J. Craig Anderson, Arizona Republic] — At no time in the Phoenix area’s history has so much office space sat empty.  Nearly 1 out of every 4 square feet of Valley office space was vacant in the third quarter ending Sept. 30, commercial-real-estate experts said.  That’s about 28 million square feet of empty space, according to Phoenix commercial-realty brokerage Colliers International, one of several Valley firms tracking the progress of sales and the leasing of office, industrial and retail buildings.

By almost anyone’s measure, the local market for commercial real estate is as bad as it ever has been.  But even the most pessimistic analysts and brokers agree that the real-estate crash positions Phoenix as an attractive relocation area for companies in more expensive states, such as California.  “Actually, the leasing agents are optimistic,” said Broker Mindy Korth of Phoenix-based CB Richard Ellis.  Still, Korth said only one thing can rescue the Valley’s real-estate market and economy: jobs.

Although their numbers vary slightly, all the local brokerages pegged the Valley’s overall office-vacancy rate at 20 to 25 percent.  Jim Achen of the Phoenix commercial-real-estate brokerage TransWestern said it’s likely the problem will get worse before it gets better.  “Unfortunately, I think our vacancy is going to inch up a little further,” Achen said.

Within the next few months, about 2 million more square feet of office space will open, and less than 20 percent of it has been reported as spoken for by a future tenant.  One of the soon-to-open buildings, the 400,000-square-foot One Central Park East office tower in downtown Phoenix, has yet to announce a lease agreement despite plans to open by the end of the year.  Korth said One Central Park is a desirable location that ultimately will find its audience.  But she agreed with other experts that the high prices paid by companies such as One Central Park developer Mesirow Financial Real Estate Inc. could make it difficult to pay the bills, based on today’s lower lease rates.  [Note: Read the full article at Office vacancy rates in metro Phoenix hit record.]

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