Downtown Phoenix office vacancy rates at lowest point in 10 years
PHOENIX — Office space vacancy rates in downtown Phoenix are the lowest in over a decade, according to Christine Mackay, director of economic development for the city of Phoenix.
“We are absolutely seeing companies taking down significant blocks of space in downtown Phoenix,” she said. “We were one of the strongest markets in the country in downtown Phoenix in absorption during this last year.”
The absorption rate is the balance of how much total space is on the market and the net of space taken by tenants. Mackey said people can expect the vacancy rate to go even lower this year, she said, as several prospective companies finish up deals to move in.
“Quite a lot of it is being driven by tech companies picking downtown Phoenix,” she said.
But a lot of that growth is also being driven by financial services and law firms.
Mackay said the young companies like the old buildings available in downtown.
“When you look at the real estate that is downtown, it’s the really interesting buildings that companies of this type are looking for,” she said, adding that some of them are warehouse-type buildings that were built nearly 100 years ago.
“These cool, funky warehouse buildings are being given a great new life as office buildings and creative buildings,” she said.
Building owners are investing millions to renovate the properties and hit all the marks on companies’ checklists.
“The open floor-plates, kind of connective spaces — places where people have lots of natural light,” Mackay said.
Mackay said the downtown area also offers a good scene where workers want to hang out after they punch their time cards. She said companies want employees to hang out so they learn to collaborate.
“Downtown is full of these great local restaurants and pubs and wine bars and coffee shops,” she said.
Many of the companies are also attracted to the availability of a well-qualified workforce.
“Companies will follow the workforce,” she said. “If a quality workforce is in nearby proximity, that’s how we’re driving significant employment in downtown Phoenix.”
Much of the workforce comes from two universities and a community college system that call the downtown area home, Mackay said, as well as light rail connectivity and several companies that had already set up shop.