Robert Lundstedt, DAUM Phoenix
The Phoenix office market ended the fourth quarter of 2014 on a healthier note, registering a vacancy rate of just less than 17 percent and a positive net absorption 1.2 million square feet. The market saw four buildings totaling 354,798 square feet completed in the past quarter. This compares to an additional six buildings totaling 459,461 square feet that were completed in the third quarter of 2014; two buildings totaling 160,622 square feet completed in the second quarter; and 117,710 square feet in one building completed in the first quarter of 2014. Some of the larger leases included Wells Fargo Home Mortgage in the East Valley for 200,000 square feet; Progrexion in Deer Valley for 66,000 square feet; and Verizon Wireless near Phoenix Sky Harbor International Airport at 170,000 square feet.
More than 2,898 million square feet of office space remained under construction at year-end 2014. Some of the notable deliveries to market last year included 2800 W. Geronimo Place in Chandler, as well as a 170,000-square-foot facility that was delivered in the third quarter and is fully leased by GM Information Technology Innovation Center. A 154,081-square-foot building in Tempe that was delivered in the fourth quarter is now 49 percent occupied by Liberty Center.
Daum Phoenix has seen very high investment and user prices in the Deer Valley Market since the fourth quarter of 2014. The metro Phoenix office market is continuing to experience growth due to great tenant demand and even greater levels of capital investment.
By Robert Lundstedt, First Vice President at DAUM Phoenix. This article originally appeared in the February 2015 issue of Western Real Estate Business magazine.