Thursday, October 2, 2014

Jones Lang LaSalle Reports Phoenix Office Market Pushes Forward with Jobs, Construction and Rent Growth

Dennis Desmond
PHOENIX, AZ – Hotspots of construction and a bevy of new financial services jobs are powering the Phoenix office sector forward, according to JLL’s just-released Q3 Phoenix Office Market Report.

According to the report, job growth among financial services firms is currently almost double that of Phoenix’s overall job growth. The activity has helped drive third quarter office demand and construction activity, in turn pushing rents and absorption upward.

“We don’t have the luxury of saying we’ve recovered all of our jobs in all of our job sectors, but there are beacons—like the financial services industry—that point to a true and robust recovery,” said JLL Senior Managing Director Dennis Desmond. “This sector has grown exponentially, and continues to add jobs every week… every month.”

The JLL report cites GM Financial and Silicon Valley Bank as two companies that have recently expanded their local footprint.

“This supports the return of Class A rents, a tide that has been slowly turning since early 2013 but that made a notable post-recession push in 2014,” said JLL Research Analyst Matt Kolano. “In the hottest office markets, such as Tempe and the Camelback Corridor, rents are reaching as high as 50 percent above the Phoenix market average, to $30 per-square-foot for full-service space.”

Matt Kolano
Together with advances in other Valley markets, Phoenix now sits at a 12-month rent growth of 3.3 percent. Rent growth in Class A product, specifically, has jumped by 5.8 percent since 2012. 

Overall, the Phoenix office market has absorbed 1,632,316 square feet of space year-to-date. This rivals the 1,684,139 square feet absorbed in 2012 and is significantly higher than the 916,570 square feet absorbed in 2013.

All of this momentum is culminating in more than 2.0 million square feet of new construction within the Southeast Market Area alone (South Tempe, Airport, Chandler and Tempe submarkets.) 

More than half—approximately 1.3 million square feet—of this space is being added in Tempe. Most new projects are build-to-suit, being developed by companies looking for custom space or hindered by the lack of large, new, modern blocks of product.

To view JLL’s Q3 Phoenix Office Market Insight Report, click here.

 For a complete copy of the company’s news release, please contact:

Stacey Hershauer
Marketing & Public Relations
(480) 600-0195

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