The construction activity of the office in Phoenix remained slow in the first half of the year, according to the latest Yardi research data. The pipeline of the metro is in seventh place of his peers, while only three properties came online, which marked a remarkable fall of the year at the office.
Similarly, office transactions in the valley placed the sixth under peer markets, while the average selling prices and rental prices were below the national level. However, Phoenix’s office was one of the few clear places, because the sector is struggling with a low occupation.
Phoenix office prices high, volume stable
Year-to-date up to and including June, the sales volume of Phoenix reached $ 466 million, with assets that traded at an average selling price of $ 185 per square foot light below the national average of $ 189 per square foot.
The transaction volume of the valley placed the sixth among his colleagues. The Bay Area led the ranking, with $ 3.2 billion in deals, while Houston followed with $ 1.2 billion. Phoenix surpassed Denver ($ 425 million) and Austin ($ 278 million), while the $ 45 million from Nashville placed the lowest figure on the top 25 of the American markets.
Remarkable turnover In the first half of 2025, Koelbel & Co.’s $ 48.3 million takeover of 2801 E. Camelback Road, an office building of 115,000 square foot, four floors. The buyer insured an acquisition credit of $ 31.7 million from Pinnacle Bank.
Another important deal was the acquisition of $ 44.6 million from Scottsdale Center, an office campus of 163,727 square foot in Scottsdale, Ariz. Baseline Partners bought it from Mig Real Estate, with acquisition funds from Glacier Bank of a total of $ 29.3 million.
The average selling price of $ 185 per square foot placed Phoenix fourth under its peer markets. The Bay Area led this category, with $ 387 per square base, with San Diego ($ 347 per square base) and Austin ($ 221 per square base) next. Denver, on the other hand, was the most affordable office metro to date up to and including June, and reached and an average of $ 95 per square foot.
Phoenix Office -Vacature below National level
The office in Phoenix’s office in June at 17.1 percent clocked the national average of 19.4 percent and marking a decrease of 110 basic point in the last 12 months. Under peermarkets, the rate of the metro was the lowest, with the 28 percent of Austin on the other side of the spectrum.
One of the few lease contracts signed in the metro was the deal of 24,772 square foot of Red Development in CityScape, an office tower in the central business district of the city. Non-profit organization Visit Phoenix will move here and establish its new head office.
Another remarkable deal was Honorhealth’s 50,000 square feet of medical office lease during an office conversion project in Chandler, Ariz.
In the meantime, the average listing percentages in Phoenix were $ 28.86 per square foot-the national average of $ 32.87 per square foot and one of the most affordable rents in high-quality secondary markets. Phoenix surpasses Houston ($ 28.35 per square base), while the most expensive rents were mentioned in the Bay Area ($ 51.93 per square base) and Austin ($ 45.26 per square base).
Slow construction activity
From June Phoenix had 1.2 million square meters of space, spread over 16 projects and good for 0.7 percent of the existing shares – the national figure of 0.9 percent. In similar markets, Austin led by 3.7 percent, while the Bay Area and Dallas followed, each with 1.2 percent.
In terms of square meters between secondary markets with a high volume, the pipeline of the valley was one of the smallest, with only Atlanta (1 million square base) and Denver (508,871 square foot). Austin led this ranking with 4.1 million square feet.
The largest office project in the metro is the coming head office of 265,525 square foot on 5353 E. City North Drive from Republic Services. Developed by US Realty Advisors, the project was supported by a construction loan of $ 168.2 million issued by Wilmington Trust.
The second largest project under construction is the Sprouts Farmers Market’s 144,500 square foot new head office project, which broke site in June.
Year-to-date up to and including June, construction in Phoenix only starts 235,715 square foot over five properties, while developers completed three properties a total of 202,521 square foot. Deliveries in the metro registered a decrease of 57.7 percent since the same period last year.
Office-to-residential projects in the metro
Office-to-residential conversions won terrain as an option for under-utilized properties. To help assess which markets and buildings make strong candidates for such initiatives, Yardi launched the conversion index last year. It evaluates the potential of a building for residential conversion using a series of scores at characteristic level.
It is such a project Conversion of Canyon Corporate CenterA distressed, two-build office campus in the metro. Caliber Cos. Last year purchased the active from ViaWest Group and recently received approval for the redevelopment project, which will include 376 lease units.
Coworking sector remains stable
From June the Coworking sector in Phoenix was 2.9 million square foot at 153 locations. In terms of square meters, the footprint of the metro was the same with the Bay Area’s and surpassing San Diego (2.5 million square base), Nashville (2.1 million square base) and Austin (1.8 million square base).
The share of Phoenix in the coworking space as a percentage of the total rentable office space was 2 percent in June – on the same footing with the national average and the better performance of Dallas (1.7 percent), Houston (1.7 percent) and the Bay Area (1.4 percent).
Regus remained the Flex Office provider with the largest footprint in the valley, with activities of a total of 622,626 square foot. The company was followed by diligent, with 259,344 square feet and spaces, with 155,435 square feet.
#Phoenix #Office #vacancy #remains #challenges