Opportunity for 2023: Valley’s Class B office buildings bear watching, industry experts say
Dec 31, 2022, 5:00 AM
(Photo by John Muggenborg/New York Times)
At more than 55 million square feet, Class B office space is the largest body of rentable square footage in the Phoenix metro. At 25.1%, it also has the highest vacancy rate and has suffered the largest negative net absorption throughout 2022 across the office market.
In total during the third quarter of 2022, those office properties in the Valley saw a net absorption of negative 2.3 million square feet — which is the space leased minus what became vacant — according to a market report from CBRE Group Inc.
Throughout 2022, there was a theme of a flight to quality by companies opting for smaller, premium offices, which often meant leaving behind a larger office footprint on the market for sublease. John Bonnell, managing director at brokerage firm JLL, expects that to continue into the new year.
“I think you’re going to see a lot of companies move next year and take new space. And buildings that can’t provide that atmosphere are going to lose and the ones that can are going to get the majority of the deals,” Bonnell said.