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PHOENIX-High Tech/back office space continues to lose users as low rents and concessions in the traditional office market redirects potential tenants from the Phoenix flex-industrial market.

“During the second quarter we experienced negative net absorption totaling nearly 800,000 sf,” says Pat Harlan, associate director with the Phoenix office of Cushman & Wakefield in a prepared statement. “More than 250,000 sf of that was in the high tech/back office sector where we see tenants moving to traditional office space.”

Harlan also notes that in previous years, when office space was more scarce and higher priced, many tenants made the move to more cost-effective high tech/back office space. Harlan says the tide has turned, however, and these tenants can now obtain great deals in the beleaguered office market.

Indeed when measured by product type, high tech/back office space posted a 15.7% vacancy rate in the second quarter. This is second only to the 15.8% posted by the office service sector of the market. Warehouse/distribution space rang in at an 11.6% vacancy rate and manufacturing had the lowest rate with 5.8%.

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