News Summary
Phoenix’s office market is experiencing a positive transformation as recent reports indicate growth in total net absorption and an increase in sales price per square foot. This rise in demand reflects a rejuvenated interest from investors despite elevated vacancy rates still present in the city. Year-to-date office sales have notably surged, highlighting strengthened buyer confidence. While challenges such as high vacancy persist, the overall trend points towards optimism for the future of commercial real estate in Phoenix.
Phoenix is witnessing a positive shift in its office market as reports indicate an increase in total net absorption, according to a recent analysis from Kidder Mathews. This improvement is crucial for the city as it reflects a growing demand for office space after a challenging period marked by high vacancy rates and fluctuating market conditions.
In addition to the positive trend in net absorption, CommercialCafe’s Office Report reveals that Phoenix has recorded its first increase in sales price per square foot in over three years. This increase signals a recovery in the market, as the average sale price for office properties rose from $165 per square foot in 2024 to $197 in 2025. This upward trend in prices highlights the reinvigoration of investor interest in Phoenix’s commercial real estate sector.
However, despite the improvement, vacancy rates in Phoenix remain elevated, currently at 19.4%, which is above the national average. This figure aligns with trends observed in many Western U.S. markets. For instance, Seattle has reported the highest vacancy rate in Washington state at 27%, while San Francisco’s vacancy rate stands at slightly above 26%. These statistics underscore a national challenge for office markets, where many cities are still grappling with the impact of the pandemic on commercial space utilization.
As of July 2025, year-to-date office sales in Phoenix totaled nearly $27 billion, marking a significant increase from the previous year. Comparatively, national office sales reached $25 billion during the first half of 2025, a growth of $8.7 billion from the first half of 2024. This data indicates strengthened buyer confidence and a resurgence in transactions across multiple urban centers.
Notably, the top U.S. markets for year-to-date office sales include the Bay Area, Washington, D.C., and Manhattan, each surpassing $3 billion in transactions since the beginning of the year. In Phoenix, 34 properties were sold, and only seven of those sold at a discount compared to their previous sale price, suggesting that many sellers are achieving favorable selling conditions.
Despite its positive changes, Phoenix’s office market is still facing competition from other major cities that are also dealing with high occupancy rates. The national average full-service equivalent listing rate for office space rose to $32.72 per square foot in July, reflecting a 3.3% year-over-year increase. The overall national vacancy rate for office space has also seen an increase of 130 basis points over the previous year, reaching the same 19.4% as in Phoenix.
In Austin, Texas, the situation is more pronounced with vacancy rates climbing 430 basis points in the past year and reaching 27% in July. This rapid increase is largely attributed to an influx of new office space, with the city adding 14.3 million square feet since 2020. While this expansion accounts for nearly 15% of Austin’s total office stock, it demonstrates how the shift towards remote work has transformed demand for traditional office space.
Overall, while Phoenix’s office market is experiencing a revival highlighted by higher net absorption and increasing sale prices, it continues to navigate high vacancy rates similar to other major markets. The change signals a cautious optimism for the future of commercial real estate in the city as it adapts to a post-pandemic landscape that prioritizes flexibility and new ways of working.
As more data comes to light and market reactions evolve, stakeholders will be closely monitoring these trends to ascertain the long-term sustainability of the recovery in Phoenix’s office sector.
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Additional Resources
- AZ Big Media: Phoenix Office Market Shows Positive Shift in Net Absorption
- Bisnow: Phoenix Office Outlook
- Colliers: Phoenix Office Market Report Q1 2025
- Google Search: Phoenix office market
- Wikipedia: Phoenix, Arizona
Author: STAFF HERE PHOENIX WRITER
The PHOENIX STAFF WRITER represents the experienced team at HEREPhoenix.com, your go-to source for actionable local news and information in Phoenix, Maricopa County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Waste Management Phoenix Open, Cactus League Spring Training, and Arizona State Fair. Our coverage extends to key organizations like the Greater Phoenix Chamber of Commerce and Visit Phoenix, plus leading businesses in technology and healthcare that power the local economy such as Intel and Banner Health. As part of the broader HERE network, including HERETucson.com, we provide comprehensive, credible insights into Arizona's dynamic landscape.
