Office leasing cools some in second quarter

By Mike Sunnucks | Rose Law Group Reporter

Net office leasing in metro Phoenix slowed down in the second quarter, according to new data from Lee & Associates Commercial Real Estate and CoStar.

Andrew Cheney, a principal with Lee & Associates, said net absorption (i.e. net office leasing) totaled 245,000 square feet in the second quarter regionally. For the first half of 2019, there has been 1.5 million square feet of net office leasing. Cheney expects to see 3 million square feet of office space absorption this year. He said the Phoenix region is also seeing less subleasing activity.

For the past 12 months, net office absorption in Phoenix totaled 4.4 million square feet. Only New York with 5.5 million of net office leasing was higher, according CoStar data.

Lee & Associates pegs the Phoenix regional office vacancy rate at 16.9 percent. Cheney said in a market outlook he expects that vacancy rate to drop to 15 percent in the coming quarters.

Cheney noted the national office vacancy rate is 9.75 percent, according to CoStar.

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