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Market Report

Phoenix Office investment Forecast

2022 Outlook

Expansionary Labor Pool and Lower Business Costs Prompt Growth in the Valley, Enhancing the Outlook

Thriving local economy lures proliferating firms. The metro population grew by more than 400,000 residents over the past five years and a similar gain is expected through 2026. A swift expansion coupled with the employment base's resilience during the pandemic has resulted in Phoenix claiming the 10th-largest job market among major U.S. metros entering this year. Notably, though, the Valley still has the runway to grow, as the local unemployment rate remains above the national level. At the same time, the cluster of colleges located in the area consistently brings in young adults and bolsters the pipeline of future workers. High personnel availability is attractive to firms wanting to grow operations, persuading many to enter Phoenix and expand their presence. Other aspects, including a business-friendly environment and comparatively lower office rents than Los Angeles and San Diego, also play a role. These factors all support improved demand for office space in 2022, producing downward pressure on vacancy as annual completions fall below 1.5 million square feet for just the second time in the past eight years.

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