MARKET CONDITIONS IN PHOENIX AND DENVER
Phoenix and Denver are the two largest markets that we provide services. Quarterly, we track the commercial office space and industrial space to better understand our clients, market trends, and to make more informed business decisions.
Continuation of MARKET CONDITIONS IN PHOENIX AND DENVER
Hybrid workplace model is to blame for low occupancy On May 16th WSJ reported that nationally office-occupancy rates are trending slightly below 50%, while Texas cities are above 60%, which is the highest in the country. Nationally, companies’ acceptance of the hybrid workplace model is the primary culprit for occupancy rates to stall at 50%. Consequently, there is a rise in sublease availability in office space and a slight uptick in vacancies rates in Q1 2023 in both Denver 22.6% and Phoenix 25%.
Phoenix is in an industrial construction boom The demand for industrial space continues to grow in Denver and Phoenix. In Q1 2023 vacancies rates decreased to 6.6% in Denver and 4.4% in Phoenix. This is healthy growth. Phoenix has one of the largest construction pipelines in the country, which the bulk of it is in warehouses and distribution centers. Some economists question whether the absorption is sustainable as millions of industrial SF become available.
Colorado and Arizona economies mirror national economy Overall these economies are in good shape despite inflation, economic uncertainty, and some of the recent tech layoffs. Both economies continue to grow, but it is forecasted that their GDPs will grow at a slower rate compared to 2022. In the labor market, there are still plenty of job openings especially in healthcare, construction, and transportation. Class A commercial office is faring better than B, and this in part is due to the competitive labor market giving office workers greater leverage. There was a slight uptick in unemployment rate in Phoenix to 3.5%, but historically that is competitive and mirrors our national average.