By Tyson Breinholt – Senior Vice President
 
The Phoenix Office Market is finally heading in the right direction. Phoenix ended the 2012 Year with Net positive absorption of 1.6 million square feet, which was a much larger jump than the previous 3 quarters. Vacancy in Phoenix also decreased for the first time in recent years, falling under 20% to 19.4% overall at the 4th Quarter of 2012. Though there are many local projects that still struggle with high vacancy, Phoenix is seeing transactions increase, which in time will allow for stable improvement. For the future we are expecting transaction volume in Phoenix to continue to rise as concessions start to diminish and rental rates start improving. This will allow for a more healthy real estate recovery in Phoenix as landlords look to stabilize their assets. Phoenix rental rates increased in 4th Quarter 2012 to an overall $19.95 per square foot (PSF) annual rate in Class A product while B & C follow behind at $19.13 and $14.43 PSF annually. The Phoenix inventory of available office product to purchase has steadily decreased in 2012 and lenders have entered the marketplace again especially in the owner/user arena. Phoenix saw a heavy increase in the Price PSF in 2012 with sales transactions on the rise and pricing increasing throughout the year. Overall, the trends in Phoenix between the leasing and sales activity continue to increase both in transactions and pricing which we anticipate to continue in the near future.