Phoenix Office Market Report

Preference shift aids high-rent submarkets. Performance among the metro's higher-end spaces and most desirable office hubs is improving. Firms committed to physical workplaces have shifted preferences to favor increased amenities and well-located complexes near retailers, as a means of enticing workers back to in-person operations. The metro's highest cost submarkets, East Phoenix and Scottsdale, recorded vacancy retreats of at least 190 basis points year-over-year in March. Both submarkets also registered positive net absorption in the Class A segment during that same period. In East Phoenix, the section of Camelback Road in the Biltmore area has seen strong leasing to start the year, while in Scottsdale the majority of deals have been inked near the Scottsdale Airpark. These movements highlight a flight-to-quality among firms, indicating the beginning stages of a more broad-based recovery to come.