PHOENIX-The Phoenix office sector continued its upward trek in 2012; according to Cassidy Turley’s Office Market Snapshot, the region experienced a yearly net absorption of 1.8 million square feet. This is more than double 2011′s year-end total.
Another piece of good news for the metro area was a 220 basis point drop in vacancy from the 27.9% vacancy at the end of 2011. The overall vacancy rate for the fourth quarter 2012 fell 1.8% to 25.7%, marking the fourth consecutive quarter of decline.
The report also forecast the following for the coming year:
- Overall net absorption in Greater Phoenix will modestly improve in 2013, particularly in the Southeast Valley.
- Average asking rents will start to bottom out in 2013. The expectation at that time will be a tightening of the ask-bid spread between landlord and tenant.
- Construction activity will pick up in 2013 into 2014.
- Class B office buildings will continue experiencing positive absorption in 2013, attracting smaller tenants.