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Phoenix office vacancy falls for third straight quarter to 23.4%

The vacancy rate dropped to 23.4%, while asking rents rose 2.2% year over year to $31.70 per square foot, as conversions and demolitions reduce office inventory.

Reported · Written up by our desk · Commercial

Phoenix’s office market vacancy fell for the third consecutive quarter to 23.4%, down from 25.4% a year earlier, according to a Newmark report cited by Bisnow.

Bisnow reports the improvement came even as leasing activity lagged the pace seen in the second quarter of 2025, with positive absorption of 167,000 square feet supported by conversions.

The outlet said no office projects broke ground between April and June, and that since 2024, 3.3 million square feet of office space has been converted or demolished in the metro, exceeding the total converted or demolished over the prior 10 years combined.

Bisnow added that asking rents increased 2.2% from a year earlier to $31.70 per square foot, while older, obsolete buildings face pressure as newer Class A offices in submarkets like North Scottsdale and North Tempe continue to lease more quickly.

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