In addition to the Phoenix office leasing marketing reaching its nineteenth straight quarter of positive office absorption, the office sales market also performed well with 18 sales totaling $293 million. The average price per square foot of these transactions was $139.07 with an average cap rate of 7.17%.
The top 10 buyers driving activity included:
- L. Long Properties
- ViaWest Properties LLC
- Arch Street Capital Advisors
- Orris Family
- Starwood Property Trust
- Sentinel Real Estate Corporation
- CBSD LLC
- Michael Flagg Group Scottsdale LLC
- Bridge Commercial Real Estate
- Suresh Chappidi
Compressed yields in coastal markets is driving more investor interest in Phoenix, where returns are still relatively attractive. The healthy and growing labor force, affordable cost of living, and temperate climate that Phoenix is well known for is continuing to attract investors as well as significant office users, such as, company headquarters and technology companies.
According to JLL’s net lease expert Tivon Moffitt, the Phoenix market is seeing activity from a healthy mix of investors.
“Single-tenant office is in high demand these days,” said Tivon. “We are seeing a significant increase in interest with the projects we’re bringing to market, much because of the strong economic fundamentals. And the great news is, Phoenix is on the map for a variety of investors including local, California-based, national and foreign.”
The average asking rent in Class A office product increased from $29.81 p.s.f to $30.88 p.s.f., a growth of 107 basis points. Tempe took command as the most expensive submarket in the Valley with a Class A asking rates of $38.73 p.s.f.