Construction Leads Charge of Mid-Sized Users

Lydon says the metro’s business friendlier proposition provides a competitive alternative.

PHOENIX—Although Phoenix recovered all of the jobs lost during the recession, the construction employment sector is still more than 80,000 jobs away from its previous peak, according to JLL Phoenix. Construction-related companies represented a significant portion of mid-sized activity in the market, but unlike previous cycles, economic recovery is not dependent on the success of single-family construction. An impressive 7,200 construction jobs were added since the first quarter of 2015, and as multifamily and commercial construction continue to grow in the Phoenix metro area, new employment growth in the construction sector is expected to translate into healthy absorption gains, says JLL.

During previous economic cycles in the Phoenix market, recoveries were marked by large, institutional users taking advantage of declining rental rates to lease large blocks of space. Now that the worst of the recession is in the rear-view mirror, the Southeast Valley has recorded a much more balanced recovery including large, mid-sized and small, local users, JLL points out. More than 1 square feet of leases were signed in the first quarter, and with only a few renewals of more than 100,000 square feet, leasing activity in the first quarter was largely comprised of small deals of less than 5,000 square feet.