John Bonnell, managing director of Agency Leasing, recently shared his thoughts with the Phoenix Business Journal on the Camelback corridor and overall Valley office trends. While the Camelback corridor is widely regarded as a highly sought after submarket, recent reports indicate otherwise.
The Camelback corridor posted an average 27.4 percent vacancy rate for the first half of 2013, surprisingly higher than the Valleywide average of 24.5 percent. It’s also higher than Tempe, Chandler and downtown, where vacancy rates hovered around more historically normal ranges between 12.8 and 15.8 percent this year. This is compounded by a high rate of absorption in the Camelback submarket. The corridor absorbed 237,751 square feet during the first half of the year, by far the highest number of any submarket in the Valley.
John gives an explanation for this and shares what he expects to happen in the coming months:
“The office market has generally been slow to recover, but the Southeast Valley was the first to rebound largely because of high demand from data and call centers and tech companies, which strategically located themselves near their labor pools. The Camelback corridor is next in line for this boom, but from businesses — real estate, insurance, engineering and legal firms, mostly — that feed off of the employment activity of those data centers and tech firms. The corridor is attractive because rental rates are still moderately low and, like downtown and parts of Chandler and Tempe, it offers high-end amenities and easy access to major highways.
Also, the vacancy numbers don’t reflect leases that have been signed or are about to be signed but the tenants haven’t moved in yet. I suspect the Camelback corridor has another 200,000 square feet worth of signed tenants that won’t move in until later this year, which could bring the area’s vacancy rate down to about 22 percent.”
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