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More Sunny Skies Ahead for Office Market

PHOENIX-Space-hungry tenants expected to gobble all of the 3.6 million sf under construction.

By D.J. Burrough | Updated on August 02, 2000

Though a whopping 3.6 million sf of office space is under construction here, absorption is so strong that vacancy rates probably won’t go up—and may even drop—in the second half of this year, according to a new market study by CB Richard Ellis.

The 1.59 million sf of new space that came online in the first six months of the year was easily absorbed by burgeoning demand, the report by the brokerage firm says. The metropolitan area experienced gross absorption of 3.8 million sf and net absorption of 1.96 million sf, leaving vacancy at the start of the third quarter a healthy 9.98%–virtually unchanged from the 9.97% vacancy factor at the start of 2000.

“We are still seeing a tremendous amount of absorption from existing companies and from companies new to Phoenix,” Kevin Calihan, a broker in a local office of CB Richard Ellis, tells GlobeSt.com. “There isn’t a submarket that is soft.”

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