|
|
12/05/24
|
This report provided by real estate services firm Cushman & Wakefield
MARKET OBSERVATIONS:
• Over the last four years, small office product between 20k sf – 50k sf has outperformed larger product greater than 50k sf.
• There are 393 buildings in the 20k sf – 50k sf, accounting for 40% of all office buildings in metro Phoenix. In square footage terms, this equals nearly 12 msf, or about 14% of the total inventory
• Vacancy rates in the 20k sf – 50k sf size range have dropped below 2019 averages, while office buildings larger than 50k sf have trended higher
• Despite aggregate negative net absorption across all building sizes over the trailing 12 months ending September 30th, 2024, the office product at 20k sf – 50k sf recorded 19.4k sf of negative absorption, well below the absorption rates in larger office product.
WHAT THIS MEANS FOR CRE:
• Flexibility is key for occupiers of small office space. These tenants tend to prefer short- to medium-term lease options which allows them to adapt relatively quickly to changing office market conditions
• Small office users are also likely to support hybrid or rotational work options for their employees, and these tenants must make the most out of a smaller footprint without sacrificing productivity
• To stay competitive, landlords must attract smaller footprint office users. While total building space typically cannot be changed, segmenting large floor plates into smaller, more collaborative spaces, as well as updating interiors with fresh finishes and tech-enabled infrastructure can appeal to tenants looking to reduce move-in costs and time.
Source: Cushman & Wakefield Research; Statistics based on leasable office buildings larger than 20K SF in metro Phoenix
Report prepared by Jared Lewis, Senior Research Analyst, Cushman & Wakefield, and Jeff Cooledge, Senior Research Manager, Cushman & Wakefield
|
|
 Return to the previous page
|
|
|
|
|
Printer-friendly Version
Email an Associate
