Tech Firms Fuel Big Rent Growth in Tempe

Tempe is one of the top tech markets for office rent growth. According to CBRE’s Tech 30 report, Tempe office rents increased by 15.8% in the last two years—from quarter two 2016 to quarter two 2018—thanks to tech tenant activity. Phoenix’s tech industry hub, Tempe is ranked fifth in the country for tech market office rent growth, behind Cambridge, Midtown Atlanta, South Orange County and Reston Washington DC. Supply shortages in Tempe are largely behind the significant rent gains, even with new speculative office construction activity.

“Demand is still outpacing supply,” Kevin Calihan, EVP at CBRE, tells GlobeSt.com. “Tempe is a relatively small existing market, although it has been expanding over the past couple of years with new construction. We continue to have more demand than we do supply. Tenants are looking for spaces in the highly desirable locations of North Tempe, close to Tempe Town Lake and Downtown Tempe with walkable amenities and proximity to light rail.”

The Tempe tech market is growing both from within—with expansion from existing tenants—and is seeing in-ward migration from San Francisco-based tech firms. This has created dynamic demand that has helped to strengthen the growing market. “Demand is so robust because it is equal parts expansions from companies that are already here and inward migration from the Bay Area,” says Calihan. “It is both factors impacting demand and creating a lack of demand.”