PHOENIX, ARIZONA – Vacancy increased for four consecutive quarters, settling at 19.1% in Q1 2021. This is the first four consecutive quarter increase in vacancy since Q2 2009 to Q2 2010. Vacancy is up 470 basis points (bps) year-over year from 14.4% in Q1 2020. The increase in vacancy is mainly attributed to large vacancies in the Deer Valley, Central Scottsdale, Downtown and Scottsdale Airpark submarkets. In addition, many speculative building deliveries throughout 2020 and 2021 have not yet been fully leased.
There were two office construction starts in Q1 2021, ending the year with 1.7-million- square-feet under construction across the market. The Grove in Camelback Corridor started two new speculative buildings at 82,272-square-feet and 181,494-square-feet. Of all space currently under construction, the Tempe submarket represents 21.9%, or 373,125-square-feet, while Chandler represents 17.6% or 300,000-square-feet. Of the 1.7-million-square-feet under construction, 21.9% of the space is committed.
The most significant construction completions of Q1 2021 occurred in Scottsdale Airpark with nationwide Cavasson (460,000-square-feet) and Axis Raintree (175,111-sqaure-feet). Nationwide had initially committed to the entire building but eventually reduced their footprint to 289,123-square-feet.
Read the full Office Report Q1 2021 here.
And the full Comprehensive Phoenix Office Market Report Q1 here.