Phoenix Real Estate Market Reports

Phoenix Office Market

For the first time in nine quarters, net absorption turned positive, achieving gains of 185,485 square feet. While this development is promising, recent job losses and the implementation of new tariffs have introduced a level of uncertainty that clouds the market’s outlook. Total vacancy was 25.5%, down 50-basis-points from the last quarter. Hybrid work continues, based on the interplay of office-using employment with office occupancy. Before the pandemic, office occupancy increased 170 SF for every employee added. Since COVID-19, Phoenix is now contracting by 314 SF per new employee. Sublease space continues to decline, with an accelerated transition to direct availability. This trend will persist in the coming quarters.

Phoenix Industrial Market

Net absorption in the first quarter of 2025 was 6.2 MSF versus 8.2 MSF in construction deliveries as numerous speculative buildings delivered partially vacant. Unleased speculative construction deliveries pushed the market’s total vacancy rate to 13.7%, the highest rate since 2011. Sublet availability increased 8.5% from last quarter to reach 8.3 MSF. Under-construction activity decreased for the sixth consecutive quarter; 13.5 MSF is presently underway. The average asking rent increased by 1.2% year over year as the market levels out while construction deliveries continue to slow down.