Phoenix Office Speeds Into '16 After Hot Q4
The metro Phoenix office market will have "staying power" in 2016, Cushman & Wakefield research guru Curtis Hornaday tells us. That is, tenants will want to be here, and investors will want to buy here.
Curtis (on the right) points out that State Farm alone will be occupying another 1.7M SF in the Tempe North submarket throughout the year. But the market's momentum is more fundamental than that. "With operational costs up to 40% less than California, metro Phoenix is expected to see more tech companies relocating to the Valley as well," he says.
According to Cushman & Wakefield's Q4 Phoenix office report, the market enjoyed its strongest quarter of growth since 2005, with over 1.5M SF absorbed. All together in 2015, tenants snapped up just under 3.3M SF, and vacancy market-wide ended the year at 18.7%, down from 19.1% a year earlier. About 12,600 of the almost 50,000 new jobs created in Phoenix in 2015 were in the office sector, Curtis says.
Investors have taken note. In one of the first big buys to close in 2016, SoCal-based Buchanan Street Partners acquired the 198k SF Paradise Valley Corporate Center at 4835 E Cactus Rd. (Buchanan Street is an active player in Phoenix.) Cushman & Wakefield executive director Chad Littell says that the property is 94% leased to "a diverse set of investment-grade tenants in finance, insurance, real estate and tech." Chad and executive director Chris Toci negotiated the sale.