X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

PHOENIX-Developers here are apparently planning for an economic recovery, having initiated construction on more than 820,000 sf of new space in the second quarter of the year, according to statistics recently published by Cushman & Wakefield.

Putting this phenomenon into perspective, Jerry Jacobs, senior director with the Phoenix office of Cushman & Wakefield of Arizona Inc. says, “Despite high vacancy figures, developers are preparing for recovery by starting projects they anticipate will be completed at the ideal time for healthy lease-up. This is a calculated risk that could prove very wise, or disastrous.”

The 820,500 sf is up from 258,000sf in new construction starts charted last quarter. This new construction is mostly concentrated in the suburbs. “Many developers believe that 2003 will bring recovery to the office market,” says Jacobs. “If construction requires nine to 12 months, they want their new buildings to come online in time to take advantage of the surge in demand.”

In addition to new construction starts, Cushman & Wakefield also reports nearly two million sf in proposed new office space. All of this is set against a background of a nearly 23% vacancy rate Valley-wide at the end of June, up from 1.2% at the end of March. The CBD’s vacancy is up to 19.5% from 18.3% at the first quarter and the suburbs checked in at 23.9% up from 22.7% three months ago.

Jacobs says sublease space “continues to plague the market.” He puts the percentage of Phoenix’s office space in their category at 3.1%.

“Sublease space has had an effect on the marketability of landlord-controlled space, including rates,” he says. “Sublease inventory has clearly influenced the overall vacancy figures.”

All things considered, the move towards new construction starts in a depressed market may be an anomaly that only the second quarter can boast, adds another source at Cushman & Wakefield tells GlobeSt.com.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.