Thank you for sharing!

Your article was successfully shared with the contacts you provided.

SCOTTSDALE, AZ-Real estate experts can look forward to two years of improving office fundamentals. The vacancy rate will continue to decrease over the next two years and absorption will exceed two million sf in 2005 and 2006.

Jerry Roberts, senior vice president of CB Richard Ellis Inc., made the prediction at NAIOP’s Trendwatch 2004, held yesterday in Scottsdale’s Camelback Inn at 5402 E. Lincoln Dr.

Roberts says the Phoenix office market is much stronger than people think; activity is up and tenants are competing for space. He expects to end this year with 2.2 million sf of net absorption and a vacancy rate of 16.5% versus the 18.4% at the end of 2003.

The next two years look even better. Roberts predicts more than 2.5 million sf of office space will be absorbed in 2005, pushing the vacancy rate down to 13.7%. In 2006, another two million sf will be absorbed, causing vacancy to drop to 12.6%, he estimates.The construction pipeline will stay steady. This year, about 1.3 million sf of office space is under construction. Next year that number will drop to less than one million sf and the 2006 call is 1.5 million sf, Roberts forecasts.

Roberts points out Scottsdale is the hottest submarket. It is, he says, performing exceptionally well at 12.7% vacancy, recorded at the second quarter’s close.

Roberts cautions Phoenix’s office market will be impacted by increasing construction costs, increasing land costs, high-rise residential developers competing for land and increasing effective rental rates.

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


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.