PHOENIX — A quarter of all office space in the Phoenix metro area is unused, according to new data from real estate broker CBRE.
CBRE's 2023 Q4 data shows a vacancy rate of about 25% for all their submarkets, though Tempe had the highest vacancy rate at 25.9%.
"Although we're now four years out of the pandemic," Sean Spellman with CBRE said, "it's still being figured out what employers are going to do."
Spellman said the vacancies are still leftover from the pandemic economy. Companies went through restructuring, shrinking, and an expanded work-from-home program. Many never went back to the way they used to do business and found they didn't need the tall office space they used to have.
But newer buildings are still being leased out in full, Spellman said, and at a higher price point, driving up the average price of office space.
Instead of a higher supply driving prices down, that's led to a glut of empty space that's also expensive.
"There's been an appetite for companies to elect to lease space in premium buildings," Spellman said, "and those premium buildings are more expensive."
Tempe Chamber of Commerce President Colin Diaz has seen the numbers as well. He's seen businesses like Carvana pause their expansions in Tempe and other businesses leave entirely.
"What are we doing to not only attract businesses here but also retain those employees?" Diaz said.
CBRE's data shows office space in Tempe took a big hit when Silicon Valley Bank failed. That left more than 200,000 square feet of office space empty.
Diaz said the Chamber might have to change expectations of what attracting new companies looks like, and how buildings might be filled.
"Where we would have seen a building before that might have three tenants that's a 10 story building," Diaz said, "that might now have 20 or 30 tenants that are going to be occupying a smaller footprint."
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