The Greater Phoenix employment outlook strengthened as 2014 came to a close, with healthy growth in the fourth quarter. Year over year, total employment has expanded by 2.9 percent, with the addition of approximately 50,000 jobs.
Job gains in office-using sectors have been particularly robust improving the office market. For the third consecutive year, employers in these sectors added approximately 20,000 jobs, representing growth of roughly 4.5 percent per year.
Net absorption in the fourth quarter totaled approximately 701,000 square feet, following 930,000 square feet in the third quarter. For the year, net absorption totaled nearly 2.4 million square feet, up approximately 60 percent from the 2013 figure.
Vacancy fell 50 basis points in the fourth quarter to 17.8 percent, and the rate fell 170 for the full year. Vacancy in both Class A and Class B buildings is improving, with the improvement in the Class A market, where vacancy is down to 16.8 percent.
Asking rents have advanced for seven consecutive quarters, ending 2014 at $22.57 per square foot. Asking rents increased by approximately $1 per square foot in 2014, with additional gains forecast for 2015.
Investment activity levels surged 30 percent in the fourth quarter and sales velocity was up 11 percent from 2013 levels. With property fundamentals improving and transaction activity picking up, sales prices are increasing. The median price increased 15 percent in 2014, hitting $130 per square foot.
Click here to see the full Phoenix Office Market Report 4Q 2014.