The Phoenix office market ended the year on a high note with steady absorption gains across the Valley and a subtle drop in vacancy thanks to limited construction completions. Although 2013 closed out in the black, occupancy gains were smaller compared to 2012 as tenants remain cautious about the state of the economy and political unease. Average rents have increased for the fourth consecutive quarter. Rents are 2.1 percent above their starting point in the first quarter of this year. Landlords located in popular submarkets such as Tempe and the Camelback Corridor are starting to push rents due to increased activity.
Phoenix unemployment has fallen to 6.8 percent as the Valley continues to add jobs on a monthly basis. Phoenix recorded 2.0 percent growth in jobs in the last 12 months, adding just over 36,000 jobs.
The biggest employment gains in 2013 have been in the education and health services (8,800 added) and trade, transportation, and utilities (8,600 added) sectors. Professional and business services, as well as financial activities, the employment sectors most closely tied to office demand, have also added a total of 13,300 positions in the last year.
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