Colliers International 2019 Q3 Greater Phoenix Office Market Report

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Q3 2019 Office Market

  • Greater Phoenix continues to remain in the Top 5 metros for job creation in the country, albeit with moderating growth. During the 12-month period ending in August, preliminary estimates show that employers added 57,800 net new jobs, an increase of 2.7 percent but below the 62,500-average increase over the first half of 2019.
  • According to the BLS (Bureau of Labor Statistics), over-the-year nonfarm employment rose in 32 of the 51 metropolitan areas with a 2010 Census population of 1 million or more, while employment was essentially unchanged in 19 areas.
  • Overall the Greater Phoenix office market had a strong third quarter; net absorption remained positive with nearly 1 million square feet absorbed. In fact, Q3 2019’s reading is the second highest absorption amount since 2015, with Q3 2018 remaining the highest third quarter reading at 1.11 million square feet.
  • Employers continue to add workers. In fact, since July 2019, a little over 14,000 new jobs have been announced which, in turn, is fueling tenant demand for office space and new development.
  • Despite delivering 2.4 million square feet through the third quarter of this year, vacancy continues to remain below 14 percent, after dropping 250 bps over-the-year to its current 13.4 percent amount.
  • Continued vacancy declines are supporting rent growth with asking rents ending the third quarter at $24.04 per square foot, up nearly 3 percent from one year ago.
  • Investment sales volume increased over-the-quarter by 8 percent to $756 million across 54 transactions and below Q3 2018’s high of $866 million. The median price per square foot decreased slightly to $168, with cap rates resting at 7.5 percent.

Outlook: The outlook for the Greater Phoenix office market continues to remain bright in both the mid-to-near-term as local businesses continue to expand and new companies continue to bring operations to the Valley. Since July 2019, a little over 14,000 new jobs have been announced with some 40 percent concentrated in the Scottsdale/North Tempe submarket areas.

While the rate of job growth has slowed, employers are continuing to add employees which supports the need for office space, and with the overall vacancy rate staying below 15 percent, new development is gaining momentum. Projects totaling a little over 2 million are under way and development of new projects, or additional phases of current projects, will likely enter the development pipeline in the coming quarters.
Real estate markets remained robust for most of the third quarter and the drag on real estate prices many were expecting, as a result of rising rates now reversing, has not materialized. With a more dovish Fed, deepening negative rates in Europe, demand for commercial real estate assets should continue to increase, especially as yields plummet and as investor need for cash flowing vehicles, due in large part to changing demographics, continues to rise.

Office Market Colliers International in Arizona

Colliers International 2019 Q3 Greater Phoenix Office Market Report

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Thomas Brophy

Research Director


As national director of multifamily research & analytics for the Cooke Multifamily Team with Colliers International, I am responsible for the aggregation, management and analysis of all market, and related, data sets.

I am committed to providing market-leading research services through the systematic deployment of custom, purpose-built software and analytic platforms for the creation of qualitative, not just quantitative, analysis.

In addition to publishing quarterly statistical reports for each market in which our clients operate, I maintain a database of both publicly available, and in-house built, leading economic/real estate indicators to provide forecasts and analyze and interpret real estate trends as they happen.

I also produce customized research reports on behalf of the team and clients, prepare market presentations and develop ad hoc research projects in support of business development.

My ethos: question different; for it is in asking better, more salient, questions that true market knowledge, and understanding is found. I am reminded of the words of T.S. Eliot who stated, “Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?”

In our new era of big data, we have reached peak data overload. Knowledge is a derivative of information; wisdom, knowledge’s ultimate abstract, can only be gained when tethered to, and guided by, past experience.

Data without context is like a light without a bulb, a market without a narrative or an explanation without a common reference point. Data is but a guide to asking better questions; better questions lead to greater understanding, which, if deployed effectively and purposely, lead to better results.

The Cooke Multifamily Team focuses on institutional and private equity assets, ranging from core plus to workforce housing across the United States. Our team includes Cindy Cooke, Brad Cooke, Matt Roach, Chris Roach, Teresa Lowery, Ron Cameron, Nicholas Solo, Aimee Healy and Kellyanne Kennedy.

Previously, I served as research director for Colliers International in Arizona, managing the research department entrusted with all market data and analysis activities. My creative outlook significantly enhanced research services for clients and brokers. Collaborating with other service lines and professionals, our research team provided extensive data compilation, including ownership, zoning, land use, property sales and demographics, and developed reliable statistical information.

My extensive experience includes collecting, analyzing and preparing market and economic data and research, as well as expertise in corporate communications, investor relations, strategic planning, brand management and public speaking.

Prior to Colliers, I was director of research for ABI Multifamily, where I developed market reports and research data used in marketing materials for ABI offices in Phoenix, Tucson, Sacramento and San Diego. I oversaw all data collection and reporting, wrote monthly market insight articles, and developed market podcasts.

As director of research and partner for Neighborhood Ventures (a multifamily investment firm), I collected, analyzed and wrote market data reports for use in investor presentations, offering materials and corporate communications. As principal with EPU Investments, I directed business and research operations for a multi-divisional investment company involved in single- and multifamily development and land services, including farming and water rights assessments and acquisitions.

Serving as an affordable housing specialist at Hendricks & Partners (now Berkadia), I provided assistance, research and guidance in creating the affordable housing division, and assisted brokers and clients in the acquisition and disposition of assets across the U.S.

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