Office vacancy rates continue to inch downward in Phoenix, and with companies announcing plans to add workers, office demand is likely to grow
GlobeSt.com, Oct. 16, 2018 - Strong job growth in Phoenix will fuel more office demand in an already active office market. According to a new office report from Colliers International, office vacancy rates fell another 170 basis points to 14.2% with 574,000 square feet of office absorption in the last three months.
Already this year, the office market has recorded 2.4 million square feet in office leasing activity, compared to 1.6 million square feet in all of 2017. Phoenix-based companies have announced plans to add more workers, including IT company Infosys’ plans to double its workforce, will likely continue to drive office activity.
“Nearly every industry in Arizona is adding jobs each month as employment statewide has increased by 2.2% from Jan 2017 to Jan 2018,” Todd Noel, executive vice president at Colliers International, tells GlobeSt.com. “The state’s unemployment rate fell 0.2%, to 5.1%, from 2017 to 2018. The leading sectors for job growth is construction at 8.3% growth (12,300 jobs), manufacturing at 4.9% growth (7,900 jobs), Education/health services at 3.5% (14,800 jobs). High-paying and prominent industries grew with professional/business services employment increasing by 1.3% (5,500 jobs).”
With the strong leasing activity, the construction pipeline is also growing. “As absorption continues to rise the construction of new office projects will satisfy that demand,” says Noel. “Spec construction will continue on a smaller scale compared to other historical cycles.”