Greater Phoenix posted a strong third quarter in the office space sector, though net absorption dipped from the robust levels of the second quarter. Strong job creation is fueling tenant demand for office space and motivating developers to start new projects.
Net absorption during the third quarter was slower but move-ins still outpaced the new construction being brought online. Greater Phoenix experienced 574,000 square feet of net absorption during the past three months, which brings the total for this year to 2.4 million square feet. The first nine months of 2017 recorded 1.6 million square feet of net absorption.
Vacancy fell to 14.2 percent in the third quarter, which is 170 basis points below a year ago. Vacancy rates have improved across property classes, which reflects the overall strength of our office market. Class A vacancy has dropped 150 basis points in the past year, even with the addition of more than a million square feet of new space.