The office buildings that make up the Phoenix Skyline have entered new territory in 2016, with rents and tenant demand achieving impressive gains over the last 12-24 months. And while JLL’s 2016 Skyline shows that rent growth across much of the nation may be peaking and moderating, Phoenix’s Skyline and trophy assets (those ultra-premium office towers within the Skyline) still look to have some significant runway ahead.
A new sense of energy
Buildings within the Phoenix Skyline are being renovated, creative spaces are under construction and companies are active and in growth mode. The new sense of energy happening in Phoenix’s Skyline projects mirrors a rising tide occurring across the Valley’s more sought-after submarkets which happen to offer the live, work, play environment. Both the Downtown and Midtown submarkets are capitalizing on this exciting momentum.
Investors in the Phoenix market have benefited from tech demand, which has grown more slowly – but also more consistently – than other comparable markets. In that process, Downtown Phoenix has emerged as a viable alternative to Phoenix’s “traditional” tech markets in Tempe and Scottsdale, encouraging investors to act and improve upon their current Skyline assets.
Skyline properties are also feeling pressure from newly renovated Warehouse District space and historic buildings emerging in Downtown Phoenix. These additional competitive properties have encouraged owners to invest in their Skyline assets, improving retail, common areas and collaborative spaces to attract new-to-market companies.
JLL’s Executive Vice President Matt Coxhead had this to say on the Warehouse District activity and its affect on Skyline assets:
“Attracting and retaining the best employees is on top of every company’s mind, and the location and amenities of office space can impact that process. The draw of Skyline properties helps in this ‘War for Talent,’ but so does space in the up-and-coming Warehouse District. While inventory in the Warehouse District is still limited, its existence benefits Downtown Phoenix as a whole. It is shining a light on what downtown is becoming and it has tech companies looking twice – companies who before would not have considered downtown, thinking it was too corporate.”
To learn more about the Phoenix Skyline, including market insights regarding office supply, demand, rents, leverage and investment, visit the JLL’s Skyline website. The digital platform offers insight across 52 markets across the United States and Canada, with the ability to compare and contrast individual markets or multiples of markets as well as individual properties or portfolios.