Lambeth and Noel: Current demand is being fueled by large corporate users expanding their payrolls—State Farm, GM, and Wells Fargo to name a few—as well as companies locating to the Valley from other markets such as Zenefits, Weebly and ZocDoc. These types of companies typically favor Class A office space. Earlier in the cycle, demand for Class A space was driven by tenants who were able to leverage soft conditions to upgrade to higher-end spaces.

While demand for high-end space has been healthy, new supply, particularly spec construction has been limited to this point in the cycle. As such, expanding businesses have been choosing between build-to-suit construction or existing vacant spaces. In 2015, spec construction of class A space should gain some modest momentum as a few projects move through the development pipeline, which could slow the rate of vacancy improvement in the class A market.

GlobeSt.com: Net absorption dipped from more than one million square feet in the third quarter to approximately 880,000 square feet in the fourth quarter. Despite the modest quarterly dip, net absorption has now been positive in each of the past 11 quarters. Net absorption for 2014 topped 2.9 million square feet, up from approximately 1.7 million square feet in 2013. How would you explain the positive net absorption for the past 11 quarters?

Lambeth and Noel: The trend of positive net absorption over the past 11 quarters is illustrative of the gradual improvement in the local economy and the business climate. The performance over the past few years also is setting the stage for perhaps more dynamic growth in the future.

From 2002-2007, for example, the Greater Phoenix office market recorded 22 straight quarters of positive net absorption. The strongest growth in that expansion cycle was during the second half of the stretch (from 2005-2007). We are not calling for history to repeat itself, but recoveries typically follow a pattern where momentum builds steadily before intensifying as improvement becomes more widespread.

GlobeSt.com: Continued absorption is helping to drive rents higher. Average asking rents ended 2014 at $21.08 per square foot, 3.3% higher than one year ago. Further increases are forecast for 2015.· Why are further rent increases forecast for 2015?

Lambeth and Noel: Current rents are similar to rates from 2005, and down more than 15 percent from the peak. As such, landlords believe rents have room to push higher, especially with market conditions strengthening. Historically, office rents have gained the greatest momentum when vacancy dips below 15 percent, but the rent decline during the recession a few years ago was so severe and so rapid, that rents have already begin to inch up despite metro-wide vacancy rates that are higher than historical norms.

Looking ahead, we anticipate tenant demand in 2015 will remain healthy, outpacing 2014 levels by approximately 10%. With tenant demand growth topping the delivery of new spaces, landlords, will continue to implement rent increases, particularly in high-demand submarkets such as South Scottsdale, Chandler and Tempe.

GlobeSt.com: What do these numbers say about the overall health of the Valley's office market?

Lambeth and Noel: The latest set of numbers highlight that the market is improving but has yet to fully stabilize. Demand is strengthening, and net absorption of nearly three million square feet over the past year is a sign that businesses are being created, are expanding and are locating in the Phoenix metro area.

Vacancy of 17.8% is still somewhat higher than the long-term market average; from 2000-2008, office vacancy in Phoenix averaged 14%. There are pockets of the market that are performing. Vacancy in Scottsdale is 15%, with vacancy in South Scottsdale down to 12%. Vacancy in Tempe is around 10 percent, in Chandler the rate is about 13 % and submarkets around Sky Harbor airport have vacancy rates in the low- to mid-teens.

The numbers also highlight that growth is concentrated in a handful of high-demand submarkets, and that different areas of the Valley are recovering in phases. Tempe, Chandler and South Scottsdale have been economic hot spots, and leasing activity in these areas has been quite active. In other areas, such as Midtown, Northwest Phoenix and in the West Valley, the market still has a long ways to go. To this point in the cycle, employment growth in these areas has been modest. Buildings in these areas are generally older vintages, and may not have the parking, amenities or floorplates sought after by tenants in the market.