Q4 2021 Office Market
Investment sales in 2021 topped $2.9 billion, with 38% of the sales taking place in Q4. We are starting to see newer construction (built 2019 or new) begin to trade at record sales prices. Fourth quarter posted 378,574 square feet of positive net absorption, bring year-to-date to -266,366 square feet.
Direct vacancy has decreased for the first time since the start of the pandemic dropping 40 bps quarter-over-quarter but increased 90 bps year-over-year to end the fourth quarter at 14.0 percent.
- Rental rates are holding strong despite the increase of sublease availability.
- Investment sales in 2021 topped $2.9 billion, with 38% of the sales taking place in Q4
- The 4th quarter saw the first sign of vacancy decreasing since the start of the pandemic
The unemployment rate in Phoenix MSA posted the lowest level ever captured in the market at 2.8 percent at the end of November.
Direct vacancy has decreased 40 bps quarter-over-quarter but increased 90 bps year-over-year to end the fourth quarter at 14.0 percent.
Investment sales were the highlight of the quarter, posting the second highest quarter of total volume in the past three years at $1.06 billion, driving median price per square foot for the quarter to $211.
The health of the Phoenix economy is driving new companies into the market and helping the growth of existing companies. The fourth quarter was a positive indicator that the office market is making a recovery. However, the influx of available sublease space and increased vacancy will force speculative
development to remain paused for the next couple of quarters.