Greater Phoenix office market posted strong first quarter 2020 according to Colliers International

Market expected to remain strong after Coronavirus leasing pause

Phoenix, April 23, 2020 – Colliers International reports the Greater Phoenix office market posted a healthy first quarter 2020, being the 32nd consecutive quarter with positive net absorption. More than 100,000 square feet of positive net absorption took place in the first three months of 2020 and the vacancy rate remained below 13 percent. Leasing has declined during the coronavirus crisis, but experts anticipate a rapid improvement after economy is reopened.

The Greater Phoenix office market delivered nearly 1 million square feet of new space during first quarter, 80 percent of which is Class A product. This new inventory was delivered with approximately 64 percent already leased. Leasing activity was very healthy during first quarter, with the number of deals involving 10,000+ square feet increasing 25 percent during the quarter.

Amazon completed negotiations for 93,000 square feet at 100 Mill in Tempe. Zip Recuiter finalized its deal to occupy the entire 89,889-square-foot Allred building near Sky Harbor Airport.  Additionally, Aetna expanded its footprint in Chandler, leasing the remaining vacancy space at Park Place Central 3.

Vacancy increased 10 bps during the first three months of this year, finishing the quarter at 12.8 percent. Vacancy has been trending lower since mid-2017, which is largely an indicator of job growth in the metro area. This marks the seventh consecutive quarter with vacancy below 15 percent. During the quarter, improvements in vacancy were recorded in all property classes.

New space delivery has not adversely impacted the vacancy rate. For example, Tempe delivered more than 450,000 square feet of Class A space and maintained a vacancy rate of just 4.9 percent. The Southwest Phoenix submarket, which is primarily occupied by government agencies, posted the lowest vacancy at 5.5 percent.

The Airport Area is benefitting from Tempe’s spill-over effect, decreasing its vacancy to 4.8 percent in the past 12 months to 14.9 percent. American Express is relocating out of the Deer Valley submarket, which resulted in a 2.9 percent increase in vacancy within that submarket. 

Low vacancy continues its pressure to increase rental rates. At the end of first quarter, the average asking rental rate was $25.48 per square foot, which is a 6 percent increase from a year ago. Asking rents are expected to rise in the remainder of 2020, as new construction is delivered and will drive up average rates.

Strong demand for office space encouraged more construction. Approximately 3.3 million square feet were under construction during first quarter. Tempe, Scottsdale Airpark and Central Scottsdale lead the Valley with space under construction. Projects planned, but not yet underway, may take a pause as developers and lenders assess stability and confidence when the economy is reopened. 

The sale of office properties dramatically slowed during first quarter, following an impressive fourth quarter in 2019. Investment sales reached $241 million during first quarter, which is less than 20 percent of the last quarter’s volume. The median sales price decreased 2.7 percent during first quarter to $170 per square foot, with cap rates resting at 7.6 percent,

The office market will experience a slowdown as a result of the Coronavirus disruption. Tenants with near-term expiring leases may benefit the most because building owners will likely be more flexible with tenant requests while negotiating leases. Vacancy is expected to marginally increase during the year because of new supply coming online and businesses re-evaluating their space criteria. The economic impact of the COVID-19 outbreak is nearly impossible to estimate and data is emerging every day. 

About Colliers International
Colliers International (NASDAQ, TSX: CIGI) is a leading real estate professional services and investment management company. With operations in 68 countries, our more than 15,000 enterprising professionals work collaboratively to provide expert advice to maximize the value of property for real estate occupiers, owners and investors. For more than 25 years, our experienced leadership, owning approximately 40% of our equity, has delivered compound annual investment returns of almost 20% for shareholders. In 2019, corporate revenues were more than $3.0 billion ($3.5 billion including affiliates), with $33 billion of assets under management in our investment management segment. Learn more about how we accelerate success at, Twitter @Colliers and LinkedIn.

Colliers International in Arizona has served clients locally and globally for more than 35 years.

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Phillip Hernandez

Research Manager


As research manager for Colliers International in Arizona, I am responsible for proactively developing and implementing research objectives and directing all research activity for the Arizona offices.

I provide leading-edge, thought-provoking research and analysis of market data for use in producing quarterly statistical market reports for each property discipline, as well as other ad hoc reports, research projects and presentations. I analyze and interpret real estate trends and maintain a database of economic indicators to provide forecasts.

Regardless of the property type or sector, I believe each has a story to tell and that data provides the opportunity to redefine the narrative. With a background in location analytics, I am highly experienced in interpreting complex data sets. Using the latest technology, I developed a system to blend analytics with a visually attractive approach to bring data to life.

Focusing on business development, I leverage market intelligence and insights for thought leadership content strategy in support of client engagement. My goal is to strategically align research and business development efforts and present research in an easily digestible format that promotes Colliers’ market share and revenue growth.

Colleagues describe me as a brilliant storyteller and a passionate, creative and experienced professional.

Prior to joining Colliers, I served as a business analyst at CBRE, where I specialized in creating tailored research reports, as well as unique and interactive applications and dashboards that elevated the market position of assets.

I delivered weekly research updates with relevant lease and sale comps, custom competitive sets and current market activity. I provided complex market and trend analyses, monitored an extensive database of proprietary market data, and delivered custom quarterly and annual reports that were strategically positioned towards targeted clients. I also led weekly department research meetings to develop initiatives surrounding market trends, produce innovative industry solutions and analyze client-centric objectives.

Previously, I was a GIS analyst for the central region of CBRE. Working exclusively with top-performing markets, I created unique models that illustrated custom real estate datasets through location analytics. I produced high-quality geographic and demographic maps, and investigated multiple approaches to storytelling through map and market analytics.

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