Q2 2024 Phoenix Office Market Report

The Metro Phoenix office market finished the second quarter with an overall vacancy rate of 16.4 percent, which is a 20 basis-point (bps) increase from the previous quarter and an increase of 120 bps year-over-year. During the second quarter, the Metro Phoenix office market recorded negative net absorption 297,604 square feet. Marking the second consecutive quarter that negative absorption was posted, largely in part to the continued downsizing trend. However, office requirements remain steady, as the Phoenix office market recorded 2.7 million square feet of gross leasing activity during the quarter. Leasing activity has been strongest for requirements in the smaller size range (below 10,000 square feet), but demand for larger space requirements increased with numerous leases for spaces greater than 30,000 square feet occurring during the quarter. At second quarter end, there was 7.2 million square feet of sublease space on the market, a decrease of over 430,000 square feet in sublease availability from the first quarter.

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