Headlines rarely tell the full story. Market statistics—vacancy rates, sublease numbers, lease activity—offer valuable insight, but they don’t always capture what business leaders are actually planning and prioritizing.
Because our team of tenant-only commercial real estate advocates is in regular conversation with CEOs and executives across various industries, we often anticipate where the market is headed before those shifts appear in published reports. That’s why we say—we’re not just observing the Phoenix office market evolve, we’re helping clients shape what comes next.
What We’re Seeing Right Now in the Commercial Real Estate Industry
Phoenix continues to stand out as one of the strongest office markets in the country. The region’s steady population growth, business-friendly climate, and ongoing corporate relocations continue to drive demand.
-
Sublease Activity: Activity has increased in some Class B properties, creating opportunities for companies to right-size or reposition strategically.
-
Class A Demand: Demand for high-quality Class A buildings—particularly in Scottsdale, Tempe, and Downtown Phoenix—remains solid, fueled by leaders prioritizing culture, collaboration, and modern workplace standards.
So while vacancy rates make headlines, the story on the ground is more nuanced. Some companies are leaning into office space—not necessarily for larger footprints, but for better, more intentional environments that support their people and long-term growth strategies. Phoenix is likely well-positioned for a healthy rebound heading into 2026.
Why Effective Office Space Matters
In conversations with executives, one theme consistently emerges: office space isn’t disappearing, it’s becoming more purposeful.
Recent surveys and statistics reflect this trend: the majority of CEOs globally expect a full return to the office within the next three years. That shift underscores the alignment between leadership expectations, culture, and the value of in-person collaboration. Many executives also anticipate that raises and promotions will increasingly be tied to in-office presence.
Because we’re engaged at the strategy table early, we see these shifts before they appear in industry reports. Even when the numbers look uncertain, we are negotiating creative solutions every week—structures that give organizations flexibility today while protecting their long-term goals. At Keyser, we don’t just react to the market; we partner with our clients to lead the way forward.
5 Phoenix Office Market Stats (2025)
Based on the latest data from Real Estate Daily News:
- Vacancy Rate: Dropped to 22.1%, the lowest since Q2 2022.
- Net Absorption: Positive at +369,460 square feet, reversing prior negative absorption.
- Under Construction: Approximately 424,747 square feet underway, including upcoming deliveries.
- Asking Lease Rate: Averaged $30.00 per square foot (full-service gross), a 4.7% YoY decline. Ultra-premium Class A+ space is listed in the mid-$50s.
- Gross Leasing Activity: More than 1.2 million square feet of new leases signed across metro Phoenix.
4 Key Trends That Will Shape Phoenix’s Office Market in 2026
- Flight to Quality: Companies are moving into higher-quality assets with modern amenities.
- Flexibility in Lease Structures: Expansion rights, termination options, and hybrid-use flexibility are top priorities in negotiations.
- Culture as a Driver: Employers are aligning space decisions with talent engagement, retention, and organizational identity.
- Hidden Costs Under Scrutiny: Leaders are evaluating full occupancy costs—including parking, utilities, and tenant improvements—beyond base rent.
These aren’t just theoretical. They’re strategies already in play across industries—from Fortune 500 firms to high-growth startups—and they’re shaping the future of Phoenix office space in real time.
Final Thoughts
The Phoenix office market is evolving quickly, and 2026 is shaping up to be a pivotal year. For leaders, the focus will be less on square footage and more on creating workplaces that inspire collaboration, innovation, and loyalty.
Disclaimer:
This content was prepared by the Keyser editorial team. It is provided for educational purposes only and should not be construed as legal or financial advice.
