Phoenix Real Estate Market Reports

Phoenix Office Market

300,061 SF in net absorption losses were recorded this quarter, a reversal from gains in the first half of the year. Total vacancy (across all classes) was 25.6%, up 40 basis points from the previous quarter. Trophy vacancy, however, continues to trend down, settling at 16.1%. Under construction activity rose after work commenced on Sprouts Farmers Market’s new 144,500-SF campus in the City North development and Fender Music’s 77,505 SF at PV Mall. These build-to-suits follow the groundbreaking of Republic Services’ 265,525 SF at 5353 E. City North Dr in late 2024. All will be headquarters operations. New office construction is rare throughout the U.S., hinting at Phoenix’s appeal to corporate occupiers.

Phoenix Industrial Market

Quarterly net absorption of 3.3 MSF, combined with heavily pre‑leased deliveries totaling 4.2 MSF, reduced vacancy to 12.8%. Total vacancy has been in the double-digits since mid-2024 and has decreased for two-straight quarters. Sublease space fell to 6.9 MSF, an 18.5% decrease from last quarter’s record high. Modern space is securing subtenants more quickly than second‑generation space. Class A has dominated overall leasing activity since 2019. Year-to-date, Class A buildings accounted for 67% of total leasing. Maricopa County was named the top county in the U.S. by Site Selection magazine for capital investment, largely driven by its dominance in advanced manufacturing, particularly for semiconductor fabrication, data centers, and supporting logistics.