October 15, 2020
Phoenix’s business-friendly environment and diverse workforce continues to attract new tenants to the market and support existing companies as they develop short- and long-term strategies in the new pandemic economy. New research by JLL shows the Phoenix office market posted just over 300,000 square feet of positive absorption during the third quarter and average asking rents increased from $28.05 in Q2 to $28.29 in Q3.
Office activity remains slower than this time last year, with tenants seeing more landlord concessions and under-construction space holding steady at just under 1.9 million square feet, with no new projects breaking ground at this time.
JLL’s John Pierson says, “The figures we’re seeing are still a mix of deals that were signed pre-COVID and ones that were initiated and signed after the pandemic was well underway. I don’t expect activity to slow in Phoenix over the next 18 months, but I do think it will look different as tenants evaluate their corporate cultures and determine how that translates to the kind of real estate they’ll need in the long-term.”
Two factors to consider, notes Pierson, are the fact that tenants are working to right-size space, while landlords, still bullish on the future of the Valley, are holding rates steady, expecting a continued inflow of new-to-market requirements.
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