Phoenix Office Market Report, Q3 2026
A summary of the Maris Advisors Q3 2026 Phoenix Office Market Report: the headline figures, the quarter in review and the notable deals. The full report is available on request.
Headline Figures
Executive Summary
Maris Advisors' read of direct vacancy — landlord-held empty space a tenant can lease directly — ended the third quarter at 21.9%, down from 22.0% in the second quarter. Measured other ways, metro office vacancy runs from roughly 19% to 25%, and availability from roughly 22% to 24%; on every measure it held or fell this quarter.
Part of the improvement comes from the market getting smaller, not only from leasing: obsolete office buildings continue to leave the inventory through conversion and demolition, and more than 3 million SF more is proposed for conversion or removal.
Net absorption stayed positive for the quarter on every measure, at roughly 24,000 to 518,000 SF depending on how it is counted, and the year to date is positive wherever all space is counted. Leasing volume slowed from the second quarter on every measure, and four leases over 50,000 SF were signed in the quarter.
Full-service asking rents held at roughly $30.70 to $32.30 per SF per year, at or near record levels; Class A asks roughly $34.50 to $41.50 depending on how the class is defined.
Two corporate headquarters totaling roughly 400,000 SF have delivered in the Desert Ridge area this year, the most recent this quarter. Among multi-tenant buildings, almost nothing is under construction and none broke ground this quarter; the remaining pipeline is largely being built for specific occupiers.
Quarter in Review
The quarter's leasing was led by occupiers committing to their own space. Western Alliance Bank took about 109,000 SF across One and Three Gateway on 44th Street as an owner-occupier, Lincoln Tech took about 91,000 SF at The Alameda in Tempe, and a confidential 100,000 SF renewal in Tempe and Upgrade's 77,800 SF downtown renewal kept large blocks off the market. Headquarters moves filled in behind them: Kitchell to Anchor Centre on Camelback, BOK Financial consolidating three offices into Hayden Ferry Lakeside, and the Arizona Commerce Authority to Bank of America Tower downtown.
Ownership moved too. The quarter's largest single-building office sale, Camelback Esplanade III, traded for $86.0 million, about $388 per SF; a ten-building office-condominium campus in Chandler sold for $30.5 million; and a roughly 684,000 SF vacant office campus off I-17 and Thunderbird sold for about $28.6 million to a buyer weighing an industrial redevelopment — one more building leaving the office market. Owners repositioned within the West Valley as well: Woodside Health sold Arrowhead Executive Center for about $25.3 million and bought Surprise Office Center for about $13.4 million.
Quarter Comparison
| Metric | Q3 2026 | Q2 2026 | Direction |
|---|---|---|---|
| Direct Vacancy | 21.9% | 22.0% | — |
| Net Absorption | 100,000 SF | 450,000 SF | — |
| Sublease Inventory | 2,680,000 SF | 2,920,000 SF | — |
| Under Construction | 40,000 SF | N/A | — |
| Avg Asking Rent — Class A | $36.60/SF FSG | N/A | — |
| Avg Asking Rent — Class B | $29.14/SF FSG | N/A | — |
| Quarterly Leasing | N/A | N/A | — |
Submarket Performance
| Submarket | Direct Vacancy | Asking Rent | Net Absorption | Trend |
|---|---|---|---|---|
| Arrowhead | 14.4% | $32.85/SF FSG | +1,728 SF | — |
| Metrocenter | 35.2% | $23.38/SF FSG | -2,135 SF | — |
| Glendale 101 | 21.2% | $36.05/SF FSG | -6,675 SF | — |
| Piestewa Peak | 23.4% | $28.33/SF FSG | +21,980 SF | — |
| Midtown | 28.4% | $25.12/SF FSG | -10,985 SF | — |
| Downtown | 29.2% | $31.46/SF FSG | -33,970 SF | — |
| Desert Ridge/Paradise Valley | 20.0% | $33.22/SF FSG | +78,685 SF | — |
| Camelback Corridor | 19.9% | $42.57/SF FSG | +9,760 SF | — |
| Central Phoenix | 22.7% | $21.36/SF FSG | -32,793 SF | — |
| North Airport/44th St Corridor | 36.8% | $28.32/SF FSG | -26,842 SF | — |
| South Airport | 23.3% | $28.73/SF FSG | -4,607 SF | — |
| Scottsdale Airpark | 16.2% | $32.92/SF FSG | -113,054 SF | — |
| Central Scottsdale | 12.8% | $31.66/SF FSG | +18,162 SF | — |
| South Scottsdale | 21.0% | $40.71/SF FSG | +39,100 SF | — |
| Tempe | 16.6% | $35.30/SF FSG | +53,054 SF | — |
| South Tempe/Ahwatukee | 21.0% | $26.06/SF FSG | +6,339 SF | — |
| East Mesa | 20.2% | $20.71/SF FSG | +2,326 SF | — |
| Superstition Corridor | 21.7% | $24.47/SF FSG | +4,257 SF | — |
| Price/Chandler/Gilbert | 18.9% | $31.93/SF FSG | +83,501 SF | — |
| Deer Valley | 26.8% | $29.61/SF FSG | -11,432 SF | — |
| West I-10 | 10.4% | $36.74/SF FSG | +13,658 SF | — |
| Loop 303/Surprise | 20.5% | $35.00/SF FSG | +4,635 SF | — |
| Phoenix-Mesa Gateway/Loop 202 | 1.1% | $34.36/SF FSG | +185 SF | — |
Notable Deals
Notable Leases
- Western Alliance Bank · North Airport/44th St Corridor · 109,000 SF
- Confidential · Tempe · 100,000 SF
- Lincoln Tech · South Airport · 91,000 SF
- Upgrade · Downtown · 77,800 SF
- Confidential · Downtown · 69,000 SF
- Kudelski (OpenTV) · Camelback Corridor · 51,400 SF
- Amcor · Metrocenter · 46,700 SF
- Arizona Commerce Authority · Downtown · 44,700 SF
Notable Sales
- SWVP Esplanade LLC (Southwest Value Partners) · Camelback Esplanade III, 2415 E. Camelback Rd., Phoenix · Camelback Corridor · 222,000 SF
- Chandler Commons Partners, LLC · Chandler Commerce Center, 5500-5590 W. Chandler Blvd., Chandler · South Tempe/Ahwatukee · 120,000 SF
- Canyon Commerce Owner LLC (RED Development) · Metro North / Canyon Commerce Center, 13450 & 13610 N. Black Canyon Hwy., Phoenix · Metrocenter · 684,000 SF
- 17235 Piedmont LLC · 17235 N. 75th Ave., Glendale · Arrowhead · 95,900 SF
- Arrowhead Executive Properties, L.P. (Woodside Health) · 14239 W. Bell Rd., Surprise · Loop 303/Surprise · 57,400 SF
- AZ E Osborn LLC · 3403/3407/3413 N. 7th St. et al., Phoenix · Central Phoenix · 55,800 SF
- 1838 W. Parkside, Inc. · 1838 W. Parkside Ln., Phoenix · Deer Valley · 24,800 SF
Square footage only; every other deal figure stays in the full report.
Who’s Winning, Who’s Losing
Who’s Winning
Tenants willing to look at sound older buildings and large floors: buildings over 100,000 SF are roughly 29% vacant against roughly 18% for smaller buildings, and Class C vacancy is at an 11-year high — the deepest leverage in the market sits there. Tenants pricing renewals against a real alternative, with free rent and improvement packages still at their most generous in second-generation Class A.
Who’s Losing
Tenants who want the best buildings: the top tier runs roughly 11% to 12% vacant against a 19% to 25% market, landlords there are holding firm on rate, and nothing new is being built to relieve it. Tenants counting on a cheap sublease: vacant sublease space is near a five-year low as subleases expire and convert to direct space.
Maris Advisors Market Insight
Phoenix office is improving by shrinking: leasing is slower, but empty buildings are leaving the market faster than tenants are, and nothing new is coming to replace them.
For the past two years the office story has been a race between returning space and returning tenants. This quarter it is a different race — between the buildings being removed from the inventory and the tenants still giving space back as they consolidate. Vacancy held or fell on every measure, but leasing slowed, so much of the improvement is the denominator getting smaller. That favors tenants for longer than the headline suggests: the space that remains is concentrated in large, older buildings whose owners need occupancy, while the top tier tightens with no new supply behind it. The leverage is real; it is just not evenly spread.
Questions and Answers
What was the direct vacancy rate for Phoenix office space in Q3 2026?
Direct vacancy was 21.9% in Q3 2026.
How much net absorption did the Phoenix office market record in Q3 2026?
Net absorption was 100,000 SF in Q3 2026.
How did direct vacancy compare with the prior quarter?
Direct vacancy was 21.9% in Q3 2026, against 22.0% in Q2 2026.
Which submarket posted the lowest direct vacancy?
Phoenix-Mesa Gateway/Loop 202 posted the lowest direct vacancy in the submarket table for Q3 2026, at 1.1%.
Where can I get the full Q3 2026 Phoenix Office Market Report?
The full report is available on request from Maris Advisors through the reports page.
The Full Report
The complete Q3 2026 Phoenix Office Market Report, with every table and chart, is available on request from Maris Advisors.