Q1 2021 Office Market
- Sublease space continues to hit the market
- Scottsdale Airpark delivers 635,111 square feet of Class A office space
- Direct vacancy increases
Direct vacancy increased 80 bps quarter-over-quarter and 150 bps year-over-year to finish first quarter at 13.8 percent.
Rental rates are holding strong. However, the increase of sublease availability is driving down overall rental rates, which settled at $27.48 per square foot at the end of March 2021.
Class A rental rates decreased both over-the-quarter and year-over-year -0.19 percent and -0.75 percent respectively, pushed by sublease availability.
Sublease availability increased a total 916,467 square feet during first quarter, elevated 29.1 percent over the quarter and 126.1 percent year-over-year.
Phoenix will continue to be viewed as a top tier market for businesses relocating and expanding. In addition to businesses growing here, our talented labor pool is also rapidly expanding.
The paused leasing activity is expected to shift as we have begun experiencing momentum with tour activity drastically increasing this quarter compared to the sudden halt last April. Rising land prices are a factor that predicts continue strong rental rates