Phoenix office market shows resilience as employment grows

Article originally posted on AZ Big Media on September 21, 2026

Phoenix is emerging as one of the more resilient major office markets in the West, with vacancy below the national average, nearly $1 billion in office sales so far this year and office-using employment posting its strongest annual growth since 2022.

According to CommercialCafe’s latest national office report, which uses Yardi Research data, Phoenix’s office vacancy rate stood at 17.2% in August, compared with the national rate of 17.8%. Phoenix vacancy was unchanged from a year earlier.

That performance stands out in the West, where most of the major markets tracked in the report had vacancy rates of 20% or higher. Only Los Angeles, at 14.5%, posted a lower vacancy rate than Phoenix among the Western markets analyzed. San Francisco had the region’s highest vacancy rate at 25.9%, followed by Seattle at 24.7% and San Diego at 24.2%.

Phoenix also remains relatively affordable for companies seeking office space. Average full-service equivalent asking rates reached $29.78 per square foot in August, up 1.7% year over year but still below the national average of $33.20. Portland, Phoenix and Denver were the only major Western markets in the report with asking rates around or below $30 per square foot.

Phoenix office sales approach $1 billion

Investment activity is another notable component of Phoenix’s performance.

Office sales in the Phoenix market totaled $929 million through the first eight months of 2026, making Phoenix the fourth-largest Western market for sales volume behind the Bay Area, San Francisco and Los Angeles. Phoenix office properties sold for an average of $202 per square foot during the period.

Nationally, nearly $43 billion in office transactions closed through August, with Manhattan leading at more than $5.1 billion.

At the same time, developers remain cautious about adding new Phoenix office inventory. Approximately 400,000 square feet was under construction in Phoenix in August, a fraction of the more than 32 million square feet underway nationally. By comparison, Manhattan had 3.75 million square feet under construction, Boston had 3.59 million and Dallas had 3.03 million.

Employment provides a bright spot

Perhaps the most encouraging signal for Phoenix’s office sector is coming from the labor market.

Office-using employment in metro Phoenix increased 1.3% year over year in July, according to Bureau of Labor Statistics data cited in the report. That placed Phoenix behind only Austin and Houston among the major markets analyzed and represented the Valley’s strongest annual growth in office employment since mid-2022.

The report attributes much of that growth to gains in information and professional and business services. It also points to major technology and semiconductor investments, including the continued expansion of TSMC, as helping generate additional demand for jobs in areas such as information technology and consulting.

The Phoenix gains come as office employment nationally moves in the opposite direction. Office-using sectors across the U.S. lost 62,000 jobs year over year, a 0.2% decline, even as total nonfarm employment increased 0.4%.

While the national office sector continues to contend with hybrid work, financing pressures and an approaching wave of loan maturities, the latest numbers position Phoenix differently from many Western peers: vacancy remains below the national average, investment sales are nearing $1 billion and office-related employment is expanding — providing potential momentum as the Valley heads toward the final months of 2026.