The Greater Phoenix office market posted its highest net absorption in two and a half years, as well as a decrease in vacancy, according to a report released by Colliers. The Southwest City’s decreased construction activity added the lowest level of new office inventory in more than 10 years. 

Net absorption during the last three months of 2024 was stimulated by owner-user acquisitions. Three acquisitions totaling more than 600,000 square feet included facilities for U-Haul, Cardon Ventures and D.R. Horton. The fourth quarter posted 358,118 square feet of positive net absorption, bringing the total year net absorption to -928,923 square feet.

Office leasing activity gained momentum, with more than 500,000 square feet of new direct leases signed during the fourth quarter, marking a 33.4 percent increase compared to the fourth quarter of 2023.

The direct market vacancy decreased for the first time in a year and a half, falling to 15.3 percent. However, vacancy rose year-over-year by 40 basis points. Total space available rose 10 basis points year-over-year to finish 2024 at 19.5 percent vacancy.