Study: Industrial vacancy rate in Phoenix hits 2008 levels, office vacancy flat this quarter


occupancy By Philip Haldiman, Editor-in-Chief | Dealmaker

The industrial vacancy rate in metro-Phoenix dropped below 12 percent this quarter for the first time in seven years, but rates in the office market stayed the same, a new report from Colliers International says.

The industrial vacancy rate hit 11.8 percent compared to 13.6 percent this time last year.

The most significant decrease came in the southeast Valley, where the rate dropped to 12.2 percent thanks to a number of tenant move-ins in the 50,000-85,000 square-foot range, the report said.

The report forecasts tenant move-ins to outpace new space by at least 1 million square-feet this year, moving the vacancy rate into the mid-11 percent range, leading to modest rent increases and sales prices.

On the other hand, the Valley office vacancy rate did not change from December, staying level at 17.8 percent.

Despite this, the study says declining vacancy for office space has been the long-term trend.

Broken down, Class A building vacancy decreased to 16.7 percent in the metro-area, seeing a marked difference year-over-year with 20.2 percent in the first quarter of 2013 and just under 24 percent three years ago, the report said.

Vacancy rates increased in Class B and C buildings during the first quarter, but the rate improved for both categories over the last year.

Last month, nearly $400 million was spent on Class A office buildings in metro-Phoenix including one of the biggest transactions the Valley has seen in a number of years — $183 million for the University of Phoenix headquarters near the southwest corner of Interstate 10 and 32nd Street.

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