Mark Seale

Phoenix is one of the fastest growing office markets in the country. In the first quarter, office rents increased 10% year-over-year, and in 2018, rents increased 4.2%, according to research from Avison Young. The first quarter marketed 23 consecutive quarters of growth as well as positive absorption. Job and population growth are behind the strong activity, and this demand will likely continue to attract new companies and fill new construction supply as it comes to market.

“Strong job growth has fueled demand for office space, which outpaced new supply in 2018. With over 600,000 square feet of net absorption recorded in the 1st quarter of this year, robust demand is continuing,” Mark Seale, principal and director of brokerage services at Avison Young, tells Globest.com. “Although over 2 million square feet is currently in the construction pipeline there is more than double that in user activity looking for space in the market. Net absorption has outpaced new supply since 2011, pushing vacancy down from its recessionary peak in second quarter of 2008 of 26.2% to 15.5% in at the end of first quarter 2019.”

It is important to note that the Phoenix office market isn't only growing but it is also developing a dynamic mix of companies—which boosts economic stability. While there is a growing tech market, financial services firms also continue to migrate and expand in the market. “Growing tech companies as well as mature financial services firms continue to be drivers by taking big blocks of space,” says Seale. “Voya Financial, Northern Trust, JP Morgan Chase and Allstate are all examples of financial companies who have expanded here. In terms of tech, Freedom Financial expanded into another 150,000 square feet recently. Also, Deloitte Technology Services, Clearlink, Grubhub, Amazon, Ring, DoorDash and Go Daddy have been growing in the tech space.”