Greater Phoenix office market:
A rebound in 2015 and a favorable outlook for the year ahead
As 2015 came to a close, the Greater Phoenix office market was in the middle of an expansion cycle, with robust tenant demand for space fueling a brightening market sentiment.
This tenant demand was illustrated by a spike in net absorption. Tenants moved into a net of more than 1.9 million square feet during the fourth quarter, bringing the total for all of 2015 to more than 3.5 million square feet—the strongest single year of net absorption since 2006.
Developers are responding to the heightened tenant activity by moving new projects through the development pipeline.
This tenant demand was illustrated by a spike in net absorption. Tenants moved into a net of more than 1.9 million square feet during the fourth quarter, bringing the total to more than 3.5 million square feet—the strongest single year of net absorption.
Developers are responding to the heightened tenant activity by moving new projects through the development pipeline.
The most prominent of these new developments is the 2.1-million-square-foot Marina Heights Project in Tempe. The first of five buildings that State Farm will occupy came online during the fourth quarter, with additional phases set to deliver in 2016 and 2017.
CONTINUING TO BUILD
Developers are responding to the heightened tenant activity by moving new projects through the development pipeline.
The most prominent of these new developments is the 2.1-million-square-foot Marina Heights project in Tempe. The first of five buildings that State Farm will occupy came online during the fourth quarter, with additional phases set to deliver in 2016 and 2017.
With 2015 in the rearview mirror, the focus is about to shift to our goals and aspirations of 2016.
The early indications call for continued strengthening in the local office market.
Employment growth will be the primary demand driver, and employers are expected to accelerate the pace of payroll expansion in 2016. This will fuel net absorption of more than 3.5 million square feet, driving further vacancy declines and additional rent increases.
It is these underlying market fundamentals that has put Phoenix back on the map for developers and is creating an attractive investment landscape. Phoenix is a growth market, and the office market finds itself in the middle of a growth cycle.