Tenant move-outs have outnumbered move-ins so far this year in the Phoenix office market, according to the new JLL Q1 Phoenix Office Insight Report, but tour activity has increased, leaving many cautiously optimistic about the year ahead.
According to the report, while the Phoenix office market absorbed more than 446KSF during the first quarter of 2021, the gains were overshadowed by nearly 641KSF of sublet space to hit the market during the same period – representing a sublet space increase of 1.2MSF year-over-year. More than 1.1MSF of new office product was also added to the Valley’s inventory – 54 percent of which was leased, but 46 percent of which was delivered as vacant.
This led to a vacancy uptick of 1.3 percent, marking four quarters of vacancy increase.
Phoenix’s business-friendly environment, diverse workforce and lower cost of doing business continue to attract interest from local and out-of-state companies. The JLL report notes Phoenix is one of the nation’s most attractive areas to relocate and expand. This helped with bolster asking rents by 1.3 percent year-over-year, though landlords are offering greater concessions. (Source)