According to JLL’s Q1 Phoenix Office Market Report, metro Phoenix has absorbed more than 1 million square feet of office space since the first of the year – a quarterly high not seen in over 10 years. This is already massively ahead of 2018, which though a notable year for local office space recorded 1.7 million square feet in total absorption for the full 12 months.
Of the 1.05 million square feet absorbed in the first quarter, JLL served on either the landlord or tenant side of 682,012 square feet of space – or 64.5 percent of all office transactions to date this year.
“The continued positive absorption numbers and growth in metro Phoenix is obviously very exciting. We are optimistic that more job creation in all types of industries will continue here and are optimistic for a continued strong 2019,” said JLL Senior Managing Director Pat Williams. “We are equally excited to have our JLL team involved in so many of the first quarter transactions that resulted in these positive numbers. It’s a testament to our great clients and the JLL team members here in Phoenix.”
During Q1, 900,000 square feet in new Phoenix office leases were completed and 78 additional tenants are collectively looking for more than 4.6 million square feet of space. Key first quarter occupancies involving the JLL team include:
• Freedom Financial, leasing a full 150,000 s.f. building at Rio2100 in Tempe.
• Deloitte, leasing 102,737 s.f. in the first of two Class A buildings delivering at Rivulon in Gilbert.
• Benchmark Electronics, leasing 63,000 s.f. at a build-to-suit corporate headquarters at Rio2100.
• Stantech, leasing 55,000 s.f. at the new Chandler Veridian, along the Loop 101/202 in Chandler.
• Serendipity Labs, leasing 31,367 s.f. in the Camelback Corridor’s new Camelback Collective.
• Workuity, leasing 19,787 s.f. at Chandler Viridian, expanding the coworking company into Chandler.
As Q1 absorption figures increased, vacancy dropped by nine basis points in the first quarter, creating the lowest vacancy rate Phoenix has seen since the second quarter of 2008. That creates a good backdrop for the approximately 2 million square feet of new office product under construction and expected to start delivery in the coming quarters.
Year-to-date office sales activity decreased just slightly to approximately $172 million, but with the same wide range of buyers interested in investing in Phoenix’s strong fundamentals.
“Collectively, these fundamentals reflect a still very strong market. We expect that momentum to continue, delivering opportunity to our clients throughout the remainder of 2019,” said Williams.
To access JLL research for Phoenix and across the U.S., visit the company’s research page at https://www.us.jll.com/en/trends-and-insights#research.