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Sublease Space Glut Pushes Office Vacancy to 17.6%

PHOENIX-The latest Cushman & Wakefield of Arizona report pegs office vacancy at 17.6%, up 4.5% from six months ago. By the fourth quarter close, most of the space will be absorbed, predict the experts in the region.

By D.J. Burrough | Updated on August 07, 2001

PHOENIX-Even though the economic slowdown has created a massive glut of office space available for sublease, some real estate experts are predicting that most of the space will be absorbed by year-end.

“Consolidations and closings of various companies have placed a sizeable amount of tenant-controlled sublease space on the market,” says Tim Whittemore, senior director of Cushman & Wakefield of Arizona Inc. The Valley’s overall office vacancy rate has reached 17.6%, compared to 13.1% six months ago. The direct vacancy rate is 14.8%, up from 11.5% at the 2000 close.

As poor as the market seems to be performing, the second quarter was much better than the first and points toward a brighter picture by year-end, Whittemore tells GlobeSt.com. He bases his call on the region’s diverse economy, continued job growth and in-migration. “We’re fortunate that we were not ‘dot-com centric.’ Areas such as San Francisco, Seattle and Silicon Valley have been heavily hit by the nation’s economic downturn and they’re not yet seeing the light at the end of the tunnel,” he adds.

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