PHOENIX—Both the Phoenix office and industrial markets had a strong showing in third quarter. The office sector is still faced with a 20%-plus vacancy, however, increasing net absorption has helped bring it down from more than 27% a few short years ago. Additionally, built up demand for new office construction, both spec and build to suit, continues to distort inventory just enough to slow vacancy progress, according to a report by Lee & Associates.

Matt DePinto, senior research analyst, Lee & Associates, tells GlobeSt.com: “The overall Valley CRE market is moving forward at a steady and sustainable pace without the hyperbole and outright rejection of market fundamentals that lead up to the crash in 2008. The pace is moving at clip that allows greater access to those wanting to get into the market in a small way yet there are enough high-profile deals to whet the appetite of big institutional investors.”

Prior to the recession, the Phoenix office sector was extremely overbuilt from the last boom cycle. Arizona's entire real estate market collapsed, including the housing market. The Phoenix market at that point had sunk lower than any other market in the country (with the exception of Las Vegas).