Phoenix Office Market Stands Out with Asking Rates Below National Average
Phoenix Office Market 2024: Vacancy & Leasing Rates vs. National Trends
The U.S. office market continues to undergo significant transformation as hybrid work and evolving tenant needs reshape demand. While many large Western cities face soaring vacancy rates and above-average asking rents, Phoenix has emerged as one of the only major markets with office asking rates below the national average. According to CommercialCafe’s August Office Report, Phoenix maintains competitive rental pricing and steady demand, positioning itself as a key market for businesses seeking affordable yet strategic office space.
Phoenix’s Competitive Office Asking Rates
As of August 2024, the national average listing rate for office space was $32.63 per square foot. Phoenix, however, remains below this threshold at around $29 per square foot, joining only Denver and Portland among large Western markets with below-average asking rents.
This affordability gives Phoenix a unique advantage in attracting businesses, especially those relocating from higher-cost cities such as San Francisco or Seattle, where asking rates exceed $60 per square foot.
Vacancy Trends Across Major U.S. Cities
The national vacancy rate reached 18.7% in August, reflecting a modest year-over-year decline. Yet, Phoenix’s position remains more favorable compared to coastal hubs like:
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Seattle – 27% vacancy
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San Francisco – nearly 26% vacancy
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Austin, TX – above 25% vacancy
While Phoenix still faces availability challenges, its relative affordability continues to stimulate leasing activity, particularly for mid-size firms and regional headquarters.
Factors Supporting Phoenix’s Market Strength
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Flight-to-Quality Demand – Class A office properties with high-end amenities are seeing stronger occupancy as companies prioritize employee experience.
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Economic Diversification – Growth in healthcare, tech, and finance sectors contributes to steady demand for office space.
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Migration & Business Relocation – Companies relocating from high-cost coastal metros find Phoenix’s pricing competitive, coupled with Arizona’s lower cost of living.
Comparing Phoenix to Other Western Markets
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San Francisco – Tops the region for asking rents at $64 per square foot, nearly double the national average.
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Los Angeles & San Diego – Lead in new office construction, with more than 1 million square feet underway in each city.
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Bay Area – Holds the top spot for office sales volume, with transactions totaling $3.4 billion year-to-date.
Phoenix, in contrast, is not leading in new construction or sales but maintains steady demand due to its affordability, making it more resilient amid shifting national office trends.
The Future of the Phoenix Office Market
The hybrid work model continues to influence office utilization, with national occupancy hovering around 50-55%. Despite this, Phoenix remains well-positioned thanks to its balance of affordability and growth opportunities. As companies continue to embrace “flight-to-quality” leasing strategies, Phoenix’s competitive rates and modern Class A spaces will remain attractive for both tenants and investors.
Are you exploring opportunities in Phoenix’s evolving office market? Whether you’re an investor looking for commercial properties or a business searching for affordable office space, Phoenix offers both value and potential for long-term growth.
Contact Denise McManus today to learn more about Phoenix and Scottsdale’s commercial real estate landscape — and discover how you can secure the right space or investment in Arizona’s thriving market.
