Colliers International 2020 Q3 Greater Phoenix Office Market Report

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Q3 2020 Office Market

COVID-19 encouraged us to re-evaluate how we track and categorize absorption and vacancy as sublease space became a noteworthy factor here in Greater Phoenix. Previously, if a tenant placed space in the market for sublease and had moved out of the square footage, we categorized the move as negative absorption and increased sublease vacancy.

However, COVID-19 peeled open a flaw in the previous recordings. The tenant maintains an agreement with the landlord and is contractually obligated to pay rent for the space until a new subtenant has filled the available space even though the tenant has moved out. Because the space remains leased, though perhaps not occupied, we will not consider such vacancy as negative net absorption.  Instead, absorption will be tracked on a leased status basis, regardless of tenant occupancy.

  • Net absorption remained positive for the 34th consecutive quarter, ending at 109,718 square feet
  • Maintaining positive absorption was possible despite the 32% increase in sublease availability over-the-quarter and a sublease space increase of more than 133% year-over-year
  • The direct vacancy third quarter settled at 12.7%, slightly increasing 20 bps over the quarter
  • Class A direct vacancy rates, currently 13%, increased 10 bps over-the-quarter but decreased 40 bps year-over-year
  • Year-over-year rental rates increased 6.8% to a current average of $27.94 PSF
  • Class A building asking rents increased 0.50% over-the-quarter and 5.1% year-over-year to $32.25 PSF
  • Class B building rents rose 0.80% over-the-quarter and 3.90% year-over-year to $24.80 PSF
  • Deliveries in third quarter increased inventory by 448,785 SF, bringing YTD construction completion to 1,859,700 SF
  • Number of investment deals increased 24%; however, sales volume decreased by 40% over-the-quarter and 79% year-over-year
  • This marked the lowest quarter of sales volume in the past five year with just $155,153,536
Outlook: The outlook for the Greater Phoenix office market remains extremely optimistic. Healthy pre-leasing of new construction, rental rates that are holding strong and a diverse industry of tenants looking to migrate to Phoenix showcase that there is light at the end of this unprecedented year. Evaluation of new office options will change. New health certifications will set buildings apart, and touchless technology will become an industry standard at high trafficked office complexes.

The upcoming election has placed Phoenix in the spotlight and positioned us as the nation’s top market for political advertising spending. At a local level, there are state propositions that could impact our economy and image as a pro-business city.

In the midst of the COVID-19 outbreak, information and data is emerging at a quick and uneven rate. The information contained herein has been obtained from sources deemed reliable at the time the report was written. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

Office Market Colliers International in Arizona

Colliers International 2020 Q3 Greater Phoenix Office Market Report

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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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Casey Koziol



As a research analyst for Colliers International in Arizona, I deliver in-depth analysis of current market conditions and trends for brokerage professionals and their clients. I compile market statistics across all property disciplines, including industrial, office, retail, healthcare, multifamily and land.

Using various in-house and online resources, I prepare data and background narrative information for market reports, publications and proposals for use by brokers, staff and management to serve the interests of Colliers’ clients.

In support of sales, leasing and business development, I create compelling client-facing presentations that illustrate and interpret real estate and economic trends. I track and analyze all aspects of the commercial real estate market and leverage that knowledge on behalf of Colliers and its clients. I also maintain sales and lease comp databases, monitor tenants-in-the-market activity, and respond to ad hoc research requests.

Clients and colleagues describe me as an ambitious and results-oriented professional, who strives for service excellence. My commitment to integrity, collaborative approach and effective communications make me a valued partner to internal and external clients.

My background includes working with landlord and tenant clients, primarily in the industrial and education sectors. Prior to joining Colliers, I served as a real estate sales and acquisitions intern at Tucson Realty & Trust Company, where I specialized in identifying potential buyers and sellers for commercial properties in the Tucson metropolitan area. Accomplishments included locating a buyer for an industrial storage property in south Tucson and facilitating a 1031 exchange on behalf of a client.

I was also a marketing analyst intern for Keyser Commercial Real Estate in Scottsdale, where I supported business developments efforts thorough researching properties on CoStar for existing and potential clients for the tenant-focused firm.

Outside work, my interests and activities include international travel, professional and collegiate sports, open water diving (I am scuba certified) and a variety of adventure challenges. I am semi-fluent in written and spoken Spanish, after spending a semester in Spain.

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