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Phoenix Office Market Feeling A Pinch

PHOENIX-The city's "national presence" makes the office market more susceptible to effects of the recession, notes Grubb & Ellis, which predicts a 16.4% vacancy rate by the end of the year.

By John Rebchook | Updated on December 14, 2001

PHOENIX-Grubb & Ellis is projecting the overall Phoenix office vacancy rate will rise to 16.4% by the end of the year, up from 15.8% at the end of the third quarter. In fact, Phoenix likely will be hit harder than most cities by uncertainty in the national economy, Grubb & Ellis notes.

“The metro Phoenix office may be feeling the pinch a bit more with corporate headquarters downsizing and layoffs mounting,” the report notes. “Over the past 10 years, Phoenix has become a significant player in the national economy, reaping many of the rewards. Consequently, the negative effects of this national presence are also evident and the Phoenix office market is expected to suffer through the turmoil of a potential recession in 2002.”

Short-term, the metro-Phoenix office market faces a sizeable challenge as the slowdown in 200 put large amounts of subleased and vacant, newly constructed office space on the market, the report notes.

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