The Metro Phoenix Office market performed even better in the second quarter than the positive first quarter. I think I’ll call that some actual momentum finally! As of mid-year 2026, the Greater Phoenix office market posted 551,000 SF of positive net absorption. This puts the market on track to reach 1 million SF- a great benchmark and would be the first seven-figure year since 2019. Direct vacancy is going down due to several factors, including: real growth in the market, correcting overcorrection (i.e., some companies gave back too much space post-pandemic, and are re-growing their footprint), and the fact that humans are social creatures who collaborate better in person. We have found that employers, and now good employees, want to be in the office, just not 5 days a week. Oh, and they want their own desk as well. The recovery continues, and I’m getting calls from investors again looking at office with considerable optimism. Check out this quarter’s report below. I have created my quick summary video as well. Click here to watch.
As always, here are my top three takeaways:
–Sublease inventory went down… and still has over 4 million SF of sublease inventory to work through. But that’s a lot better than the nearly 7 million on the books back in 2023.
–Lease rates went up… tenants want tenant improvements, and amenities in their buildings. Conference rooms, coffee shops, wellness rooms, new finishes, furniture, exposed ceilings and quality- all cost money. Even at 18.7% vacancy. See next point
–The Camelback Corridor Factor… The submarket with the highest rents in Metro Phoenix belongs to the Camelback Corridor, at an average of $42.48/SF/YR. Compare that to the Metro Average of $31.09. Why? This article about the largest lease in the Corridor we just closed explains it. ( Click the link here )
Our team at The Coppola-Cheney Group is working on over 150 active deals. If you’re trying to figure out what this all means for your office strategy, let’s connect.
Click here to read the full report
Click here to read the full report