The Southeast Valley fuels office fundamentals with strong current and prospective activity
The Southeast Valley holds approximately 32 percent of Phoenix’s office inventory, and has accounted for 64 percent of 2019’s total absorption halfway through the year
August 14, 2019
- The Southeast Valley, comprised of six office submarkets, holds approximately 32 percent of Phoenix’s office inventory, and has accounted for 64 percent of 2019’s total absorption halfway through the year. More than 1.4 million square feet of net absorption has been absorbed throughout 2019, putting the Southeast Valley alone on track to outpace 2018’s total net absorption for the Phoenix metro area of 1.7 million square feet.
- The Chandler and Tempe submarkets led overall absorption activity this quarter in the Southeast Valley, with large occupancies from tenants such as Bridgepoint Education (163,142 sf), and Cognizant (51,864 sf) in both Chandler and Tempe, respectively.
- The Tempe submarket continues to be one of the most popular submarkets and boasts the lowest direct vacancy rate in the Valley at 3.9 percent, with class A product being only 3.7 percent vacant. Although Tempe holds the lowest direct vacancy rates in the Valley, the Chandler submarket currently holds the largest amount of 2019 absorption, with 558,013 square feet. Absorption is expected to continue it’s trend in the Southeast Valley and outpace 2018’s performance.
- 1.5 million square feet is currently under construction in the Southeast Valley to alleviate
- lessening supply, as 2018 and YTD 2019’s absorption has quickly outpaced recent deliveries. Of the 1.9 million square feet under construction throughout the market, 78 percent resides in the Southeast Valley.
Source: JLL Research