Phoenix Office Market
Annual net absorption (855,966 SF) was positive for the first time in three years. Half of this figure came from the fourth quarter’s gain of 437,394 SF. Total vacancy tightened to 25.0%, down 40 bps from last quarter and 90 basis points from 2024. Asking rents were up 1.2% year over year. Desirable Class A space continues to lease quickly, while older, long-vacant spaces are dragging down average rates. Sublet availability remains low at 4.6%. With no new construction starts this quarter, limited supply could push vacancy lower and support rent growth, particularly in the Class A segment. Sprouts Farmers Market broke ground on its new 144,500-SF HQ this year. Office construction is rare across the U.S., and this highlights Phoenix’s appeal to corporate occupiers.
Phoenix Industrial Market
Quarterly net absorption of 2.9 MSF, combined with heavily pre‑leased deliveries totaling 3.8 MSF, reduced vacancy to 12.8%. Total vacancy has been in the double-digits since mid-2024 and has decreased for three-straight quarters. Total vacancy was down 20 bps from last quarter and 100 bps from year-end 2024. Available sublease space rose 6.4% from last quarter to reach 7.4 MSF. Class A has dominated overall leasing activity since 2019. This year, Class A buildings accounted for 67% of total leasing. Maricopa County was named the top county in the U.S. by Site Selection magazine for capital investment, largely driven by its dominance in advanced manufacturing, particularly for semiconductor fabrication, data centers, and supporting logistics.
Download Phoenix Industrial Market Report 4Q25