"The significant part of that is that it didn't move much," says Jim Fijan, a SVP office specialist with CB Richard Ellis. "We had a great year."

Demand for office space was great enough to absorb the 3.2 million sf of new multi-tenant and single-tenant office buildings that were completed during the year, he says. During 2000, the Valley experienced gross absorption of more than 6.2 million sf, while the net absorption totaled more than three million sf.

"All the markets are relatively healthy," he says. "Scottsdale continues to be on fire."

More than one million sf of new office space came onto the market during 2000 in the Scottsdale area, the majority of which is in Scottsdale Airpark area. However, demand was strong enough to more than absorb the new space. The vacancy rate in the Scottsdale Airpark area dropped from 10% at the end of the third quarter to 8% by year-end.

The on-going construction of the Loop 101 in northwest Phoenix also has made that area popular with office tenants and developers. "It is a much bigger draw for employers up there," Fijan says. The freeway, which links up to Interstate 17, will run from the West Valley all the way to Scottsdale when completed in the next two years. Company executives and CEOs will soon be able to build their offices in northwest Phoenix, now that the freeway will make it an easy commute their upscale homes in north Scottsdale.

During the year, approximately 300,000 sf of new office space was built in the northwest corridor along I-17, and another 850,000 sf was under construction.

Fijan says he expects to see a pullback in the amount of new construction in 2001 as lenders tighten equity and pre-leasing requirements. As a result, he expects the overall vacancy rate to come down slightly.