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Office Market Shows Positive Net Absorption After Two-Year Decline

PHOENIX-Cushman & Wakefield of Arizona reports market conditions are changing, including a decline in new construction, although no one submarket experienced six-figure absorption for first quarter 2002.

By Joel Cone | Updated on April 03, 2002

PHOENIX-For the first time in more than two years, absorption of office space in the Valley market was positive despite a commensurate rise in the local vacancy rate.

The quarter’s net office absorption was a positive 288,526 sf, calculated on a positive absorption of 323,131 sf in the non-CBD markets and a negative absorption of 34,605 sf in the Phoenix CBD. The direct vacancy rate rose from 17.9% in fourth quarter 2001 to 18.7% for this year’s first quarter.

“We believe this signals the beginning of a recovery for our real estate market as the national economy rebounds,” said Chris Toci, director of Cushman & Wakefield of Arizona Inc. “Vacancies rose because of new buildings being completed. The good news is that construction activity has decreased with only 258,000 sf of new space under way. This is an impressive drop-off from the 2.86 million sf that was under way at the same time last year. Should the positive absorption continue, we will begin seeing lower vacancy rates as the year continues.”

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