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2022 Q3 Greater Phoenix Office Market Report

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Phoenix Commercial Real Estate Office Market

Q3 2022 Office Market

Three projects delivered during third quarter totaling 472,722 square feet. This brings year-to-date completions to 759,722 square feet. There are currently 1.2 million square feet of office space under construction, marking the lowest level of product under construction since 2017. Rental rates marginally increased in the third quarter, rising 4.0 percent year-over-year ending at $28.88 per square foot. An additional 828,713 square feet of sublease space hit the market during third quarter, an increase of 50 bps quarter-over-quarter and 140 basis points year-over-year.

Key Takeaways
  • Year-to-date sales volume reached $2.2 billion
  • Rental rates increased 4.0 percent year-over-year to $28.88 PSF
  • 828,713 square feet of sublease space was added to the market
Despite the economic headwinds that are feared in the US economy, the Phoenix MSA is battling to maintain a healthy environment. As of August 2022, Phoenix metro had grown its labor force by 87,100 employees compared to August 2021, which represents a 3.9 percent increase.

The third quarter posted a positive level of net absorption for the second consecutive quarter ending at 189,874 square feet, bringing the year-to-date level to 550,540 square feet. Direct vacancy increased 20 bps quarter-over-quarter ending at 13.6 percent. Sublease availability continues to sprout throughout the market.

Investment sales volume during the third quarter fell to the lowest quarter of the year ending at $593 million, bringing year-to-date volume to $2.2 billion. Year-to-date sales volume is currently 30 percent higher than the first three quarters of 2021. The median price per square foot declined 5.8 percent quarter-over-quarter ending at $173 per square foot, for the quarter.

The labor market continues to be the dominant driver of the office market. However, with the shift in interest rates, we are starting to see more and more mortgage companies look to sublease their space as the home lending market slows. Next quarter the market will be hit with two very large vacancies that will end this year’s run of positive absorption. Speculative construction will remain relatively low due to the flexibility of work from home model, but the trend of increasing rental rates will stay, especially in top tier Class A properties.

Phoenix Commercial Real Estate Office Market

2022 Q3 Greater Phoenix Office Market Report

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Phillip Hernandez

Director, Research | Arizona


As research manager for Colliers in Arizona, Phillip Hernandez is responsible for proactively developing and implementing research objectives and directing all research activity for the Arizona offices.

He provides leading-edge, thought-provoking research and analysis of market data for use in producing quarterly statistical market reports for each property discipline, as well as other ad hoc reports, research projects and presentations. Phillip analyzes and interprets real estate trends and maintains a database of economic indicators to provide forecasts.

Regardless of the property type or sector, Phillip believes each has a story to tell and that data provides the opportunity to redefine the narrative. With a background in location analytics, he is highly experienced in interpreting complex data sets. Using the latest technology, Phillip developed a system to blend analytics with a visually attractive approach to bring data to life.

Focusing on business development, he leverages market intelligence and insights for thought leadership content strategy in support of client engagement. His goal is to strategically align research and business development efforts and present research in an easily digestible format that promotes Colliers’ market share and revenue growth.

Colleagues describe Phillip as a brilliant storyteller and a passionate, creative and experienced professional.

Prior to joining Colliers, he served as a business analyst at CBRE, where he specialized in creating tailored research reports, as well as unique and interactive applications and dashboards that elevated the market position of assets. Phillip delivered weekly research updates, with relevant lease and sale comps, custom competitive sets and current market activity.

He provided complex market and trend analyses, monitored an extensive database of proprietary market data, and delivered custom quarterly and annual reports that were strategically positioned towards targeted clients. He also led weekly department research meetings to develop initiatives surrounding market trends, produce innovative industry solutions and analyze client-centric objectives.

Previously, Phillip was a GIS analyst for the central region of CBRE. Working exclusively with top-performing markets, he created unique models that illustrated custom real estate datasets through location analytics. Phillip produced high-quality geographic and demographic maps, and investigated multiple approaches to storytelling through map and market analytics.

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John Archer



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Using various in-house and online resources, John monitors real estate transactions and dissects data to analyze and understand what is happening throughout the various property sectors of commercial real estate. John researches and prepares data and background narrative information for market reports and proposals for use by brokers, staff and management, to serve the interests of Colliers’ clients.

Applying his strong background in analytics and research, John tracks all aspects of the commercial real estate market to illustrate and interpret real estate and economic trends. He leverages that knowledge on behalf of Colliers and its clients. John also maintains sales and lease comp databases, monitors tenants-in-the-market activity, and responds to ad hoc research requests.

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Prior to joining Colliers, John was a real estate agent with the Barclay Group, where he focused on zoning and site selection for property developments. He was also responsible for preparing competitor analyses to dissect performance data.

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