Phoenix office development is on the rise, according to this month’s Office Report from CommercialCafe.

Key Takeaways

  • The national office vacancy ratewas 18.6% in September, following another dip of 80 basis points year-over-year.
  • The national office listing rate averaged $32.79 per square foot in September, which marked a 0.3% slip from the previous year.
  • The office supply pipeline remained modest at the start of October with a little more than 38 million square feet of office space currently under construction.
  • Manhattan, N.Y., topped the list for YTD sales through September in terms of dollar volume ($5.5 billion), followed by the Bay Area ($4.3 billion) and Washington, D.C. ($3.2 billion)
  • Miami and Manhattan tied for the lowest vacancy rates in September, each averaging close to 13%.
  • Office asking rates in most Southern U.S. markets were close to the national average, while Midwestern markets remained among the most affordable.
  • The Boston office pipeline remained the most active with nearly 4.5 million square feet of new office space under construction.

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Seattle Tops Vacancy, San Francisco Asks Highest Rents, Phoenix Ramps Up Development

acancy rates were above the national average of 18.6% in the majority of the Western U.S. markets we surveyed for this U.S. office markets report. In this case, Seattle office space saw the highest vacancy rate in the region with about 27% of space unoccupied at the close of September. Then, San Francisco was second in the region with vacancy reaching 26.7% last month.

Supported by Silicon Valley and the wider suburban tech ecosystem, the northern California market topped the regional list for rents with office space in San Francisco asking a little more than $64 per square foot in September — nearly double the national average of $32.79. Nearby, Bay Area office space remained the second-priciest in the region last month. Here, asking rates averaged nearly $52 per square foot — the only other Western U.S. market where rates surpassed the $50 mark.

Not to be outdone, San Diego (at #3 with asking rents averaging roughly $45 per square foot) and Los Angeles (#4 at $41 per square foot) closed out the block of California markets at the top of the list.

Otherwise, Portland, Ore.; Phoenix; and Denver remained the only large markets in the region where office asking rates rested below the national average in September, each modestly below $30 per square foot.

Then, looking at total market office sales in the region, the top position was taken by the Bay Area, where transactions since the start of the year amounted to nearly $4.3 billion. Further south, Los Angeles office space followed in second place with a little more than $2 billion in 2025 sales through September. San Francisco and San Diego were the only other markets in the region to see year-to-date sales above the $1-billion mark last month.

During that same time, the Bay Area also stood out for sale prices: Office space here commanded the highest average sale price per square foot in the Western U.S. so far this year ($392). Once again, San Francisco ($309 per square foot) and San Diego ($304) were the only other markets in the region where office sales closed for more than $300 per square foot, on average.

California markets also led the region in terms of development last month. More precisely, Los Angeles had 2.1 million square feet under construction, San Diego had 1.8 million square feet and San Francisco had 1.5 million.

That said, they were no longer the only markets in this group with more than 1 million square feet of new office space in the pipeline. At the start of October, there was also a little more than 1.1 million square feet of Phoenix office space under construction.