The Phoenix office market continues to show signs of resilience in 2026, outperforming many major Western markets as vacancy declines, investment activity remains healthy and medical office properties emerge as a particularly strong segment.

According to CommercialCafe’s July 2026 national office report, Phoenix recorded an office vacancy rate of 16.9%, down 60 basis points from a year earlier. That puts Phoenix below the 17.7% national vacancy rate and makes it one of only two major Western markets — along with Los Angeles — with vacancy below the national average.

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The performance stands out in a Western region where office vacancies remain elevated. San Francisco posted a 26% vacancy rate in July, followed by Seattle at 24.9%, San Diego at 23.1% and the Bay Area at 22.5%.

Phoenix also remains relatively affordable for companies looking for office space. Average full-service equivalent asking rents reached $29.68 per square foot in July, up 2.1% year over year but still below the national average of $33.58. Phoenix, Portland and Denver were the only large Western markets where average asking rates were around $30 per square foot or less.

Phoenix office sales approach $800 million

Investor activity provides another positive signal.

Phoenix recorded $791 million in office sales through the first seven months of 2026, making it the fourth-most-active Western market behind the Bay Area, San Francisco and Los Angeles. Properties sold for an average of $189 per square foot.

Phoenix’s sales volume also exceeded San Diego’s $736 million and Denver’s $697 million through July. Nationally, office sales surpassed $36 billion across 1,576 transactions during the first seven months of the year.

Development, meanwhile, remains relatively restrained. Phoenix had approximately 550,000 square feet of office space under construction in July, compared with 1.33 million square feet in Los Angeles and 1.3 million square feet in San Diego. Nationally, roughly 29.5 million square feet of office space remained under construction.

Medical office emerges as Phoenix bright spot

One of the strongest signals for the Valley comes from medical office properties.

Healthcare real estate has proven more resilient than traditional office space because many medical services require patients and providers to be physically present. An aging population and growing healthcare demand are also supporting the sector even as conventional offices continue adjusting to hybrid work and corporate consolidation.

Phoenix is particularly well positioned to benefit from that trend.

Among Phoenix medical office properties sold since 2024 for which comparable previous sales were available, 89% appreciated in value, compared with just 65% of traditional office properties. Phoenix’s medical office appreciation rate was among the strongest highlighted nationally, trailing only Tampa’s 90%.

The trend reflects a broader shift in office development. Medical office projects accounted for 26.2% of office starts nationally in 2025, up from 11% in 2020. While general office starts have fallen 73% during the decade so far, medical office starts declined only 9.5%.

For Phoenix, the combination of below-average vacancy, competitive rents, nearly $800 million in investment sales and strong medical office performance offers evidence of a market finding firmer footing while many major U.S. office markets continue working through the effects of changing workplace patterns.