Phoenix office sublease availabilities trending down

Article originally posted on CoStar on December 9, 2025

The total amount of office space available for lease in Phoenix decreased to about 34 million square feet in the third quarter of 2025, down from more than 36 million square feet in early 2024.

A reduction in sublease availabilities was a key factor supporting the sector’s recent improvement. About 5.5 million square feet of sublet space was available for lease in the third quarter, representing 2.8% of total inventory. This marks the first time the Valley’s sublet availability rate was below 3% in over three years. It is also a 30% decrease from the recent peak.

While some of the improvement stems from the expiration of sublease listings that then transition to direct availability, leasing volume for sublet space has also been elevated. An average of more than 900,000 square feet of sublease space was leased in 2024 and 2025 each, more than 25% higher than the pre-pandemic five-year annual average.

The sublease market often provides tenants with an opportunity to lease space at a discounted rate. The spread between asking rents for direct and sublet space was approximately 20% in the third quarter of 2025, a notable widening compared to the period from 2015 to 2019, when the premium averaged less than 10%.

For example, Berkshire Hathaway HomeServices Arizona Properties subleased 15,300 square feet at SGA Corporate Center at Kierland in August 2025, paying $32.50 per square foot full service. A similarly sized direct listing at the four-star Scottsdale Airpark office has an advertised rent of $40 per square foot, a 23% premium.

Tenants may also gravitate toward sublease space because of the speed and ease of move-in. Sublet suites are often built out and do not require the same amount of work to make ready for occupancy as their direct suite counterparts. Additionally, many subleases are advertised as “plug and play,” with furniture, fixtures and equipment conveyed with the sublease. Local office brokers note that move-in readiness is a key consideration for many office users.