By Corina Vanek | Phoenix Business Journal
The Valley’s office vacancy rate continued to fall during 2019, reaching 14% by the end of the year, even as the region saw the most new office construction since the end of the Great Recession.
Sean Spellman, senior vice president with CBRE in Phoenix, said 2.4 million square feet of office space completed construction during 2019, and there is another 1.95 million square feet of office space now being built, 61% of which is pre-leased.
“It’s a healthy market because of pre-leasing,” Spellman told the Business Journal. “And projects that are built purely spec are getting pre-leased during construction.”
As evidenced by some of the biggest leases of 2019, many of which went to buildings that completed construction during the year or were still under construction at year’s end, tenants have been willing to pay more rent for a nicer building, Spellman said. Average asking rent in the Valley was $27 per square foot at the end of the year, according to CBRE research.
“New construction leases do well,” he said. “The older buildings that are in need of renovations are more difficult to lease.”
Read More (subscriber content)