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Even as the overall economy improves, rising unemployment numbers are expected to be high in 2010 according to the Conference Board’s Employment Trends Index. As companies begin to release space due to downsizing, there are too few around to fill it, therefore resulting in suppressed market conditions for the Phoenix office sector for quite some time. This, however, does not preclude any opportunities that may arise for players on all sides of the equation. Knowing when to act in this environment may be the most valuable asset when emerging from this prolonged downfall.
The overall vacancy trend continues to rise to 21.9%, up from last quarter’s 21.4%. The trajectory will remain upward over the next several quarters. Office absorption posted a negative 859,546 square feet (sf) for the quarter and a devastating year-to-date total of negative 2,117,771 sf. There were no sectors with positive absorption for this quarter. Overall rental rates have declined to $23.64 per square foot (psf), down again from $24.51 psf last quarter. Deliveries have dropped significantly this quarter at 378,000 sf. Construction activity continues to contract overall to 1.96 million square feet (msf).
Contact Matt DePinto at 602.222.5029 for more information.
  Phoenix Office Market Report 3Q09.pdf
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