Marcus & Millichap has published its Q4 2026 Phoenix Metro Area Office report, which shows the Phoenix office recovery is contained to select submarkets and property segments.

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 “Phoenix is not experiencing a broad-based office recovery. We are seeing a flight to quality, with the strongest assets and locations gaining momentum while older commodity space continues to face significant pressure.” said Ryan Sarbinoff, senior managing director, market leader.

Key findings include:

  • Metro vacancy declined 20 basis points year to date through June, largely because of inventory removals. The Camelback Corridor and North Scottsdale led improvement, while Central Corridor vacancy increased 300 basis points to 26.5%.
  • Vacancy at properties larger than 50,000 square feet and built after 2010 fell approximately 600 basis points from its 2024 peak to about 22%. However, only around five leases exceeding 50,000 square feet were signed through August, compared with roughly 15 during the same period a year earlier.
  • Phoenix added more than 6,000 office-using jobs through July after losing white-collar positions from 2022 through 2025. Professional services added approximately 7,000 jobs, while the financial activities sector lost 2,000 positions.
  • Office deliveries will increase from 2025 but remain below half the past-decade average. Demolitions and redevelopment removed more than 2 million square feet of inventory during the year ended in June, primarily in Northwest Phoenix, Tempe and near Sky Harbor International Airport.
  • . Investment activity remained selective in 2026 amid elevated vacancy and softer leasing conditions. Private buyers favored well-leased properties built after 1980, while larger transactions generally involved repositioning older buildings for alternative uses.
  • The 2026 forecast calls for vacancy to decline 30 basis points to 18.5%, while average asking rent increases 0.5% to $26.60 per square foot.

 “The next phase of the Phoenix office cycle will be defined less by broad market recovery and more by asset selection. Well-located, high-quality properties should continue to outperform, while challenged assets will require either a meaningful basis adjustment or a clear repositioning strategy.” added Sarbinoff.

Access the report here.