Even In A Strong Market, Office Properties Compete On Price
Office absorption in Phoenix might be the most robust in recent memory, but even so office space has to compete for tenants — through attractive new amenities, but also on price.
“In the past 12 months, Phoenix has ranked second in the nation — behind only Chicago — for total office space absorption,” JLL managing director John Bonnell said. That's naturally put upward pressure on rents, especially for assets in certain submarkets, such as Downtown Tempe. But not everyone needs, or wants to pay for, Downtown Tempe office space.
Owners Cypress Office Properties and Harbert Management Corp. recently tapped Bonnell and colleagues Brett Abramson, Chris Latvaaho and Joe Charles to lease up Park Garden and Park Bridge at Fountainhead, a recently renovated, two-building office campus at 1501 and 1620 West Fountainhead Pkwy. in Tempe. Currently the property, totaling 292k SF, is 69% occupied.
"The Fountainhead is an option for tenants seeking high-amenity space that's near Downtown Tempe and Phoenix, but at a price point that's as much as 40% lower than north Tempe office rents," Bonnell said. Tenants at the properties include State Farm, Centene, Provision and Heartland.
Both buildings were renovated in 2016 and now feature upgraded lobbies, new outdoor tenant areas, enhanced landscaping and spec suites. “These enhancements speak to companies needing a polished central office location, but who don’t need to pay north Tempe prices for their space,” Abramson said.
Find out more about the Phoenix office market in our Phoenix Office of the Future event on March 28 at Biltmore Center. The event will feature speakers from ASU, Liberty Property Trust, Rockefeller Group, Ryan Cos, Sunbelt Holdings, ViaWest and more, plus breakfast and schmoozing.