PHOENIX — Renting office space, on average, costs Valley companies a little bit more in 2022.
Despite higher vacancies than pre-COVID-19 figures, negative net absorption and firms still determining how much office space they need, Phoenix saw a 2.8% year-over-year bump in direct asking rents in 2022. A fourth-quarter market report from real estate firm Avison Young found the direct asking price per square foot reached a new high of $28.90.
"Most companies are asking 'how can I do this without having as much office space?'" said Mark Seale, principal of Avison Young and director of brokerage services in Phoenix. "That's obviously leading to a glut of office space that's either for sublease or eventually going back to the landlord. As you look further down the road, that could create some stress for some of these landlords as these leases burn off over the next couple of years."
The exception is the premier, class A spaces as companies continued to have a flight to quality for office. That market has buoyed the cost to the overall market with the rental rates reflecting the high cost of construction and the build-out of the amenities offered at the space.
