After years of contraction, the Phoenix metro office market is finally stabilizing — and the Southeast Valley is leading the charge.
Key Market Highlights
- Valley office vacancy: ~26% at end of 2025
- Down roughly 1% year-over-year
- Lowest level since late 2023
- Positive net absorption in 2025: ~973,000 SF
- First full year of positive absorption since 2019
- Nearly 80% occurred in Q4 alone
- Q4 leasing activity: ~2 million SF
- Strongest quarterly total since mid-2024
- 10 leases signed over 50,000 SF — largest deal volume since pre-pandemic
Southeast Valley Performance
- Over 300,000 SF of positive net absorption in 2025
- Vacancy around 25% — below Valley average
- Tempe saw vacancy drop more than 6 percentage points YoY (largest decline in metro)
- Chandler and Gilbert posted modest rent increases
The recovery is being driven by a clear “flight to quality.”
- Class A vacancy dropped to ~28% (lowest in over two years)
- Demand concentrated in newer, amenity-rich buildings
- Class C properties continue to struggle with negative absorption
Construction & Supply
- Only one speculative office project under construction
- Minimal new supply limits risk of another vacancy spike
- Sublease vacancy down 35% from late-2023 peak
Why This Matters for Arizona Investors
Even if you only invest in single-family homes in Maricopa or Pinal County, this trend matters:
- Corporate expansion drives job growth
- Job growth drives household formation
- Household formation drives rental demand
- Rental demand supports rent stability and appreciation
The Southeast Valley — Tempe, Chandler, Gilbert — continues to position itself as an employment hub. That strengthens long-term fundamentals for nearby single-family rentals.
More construction + strong demand = healthier, more stable market conditions.
Free markets and free development create opportunity.