By Mike Sunnucks | APR 11, 2017 | BizJournals.com
Who said the suburbs were dead?
Suburban areas of Phoenix accounted for 8 percent of the net office leasing in the entire U.S. in 2016.
Only Dallas (13 percent) accounted for more, with Phoenix tying Los Angeles for second. That is according to a new research report by CBRE Group Inc. (NYSE: CBG).
CBRE looked into suburban commercial real estate deals last year.
“Since the end of the Great Recession, the U.S. suburban office market has tightened at a steady clip, boosted by improving demand and low overall levels of new supply compared with previous cycles,” said Andrea Cross, Americas head of office research, CBRE. “Still, the suburbs are having a hard time shaking the perception that they’re struggling to keep up with the allure of vibrant downtowns.”
That’s because millennials, tech and creative companies have sought out more urban locations.
Fifty of the 58 suburbs analyzed by CBRE had positive absorption last year. The New Jersey suburbs and Austin accounted for 4 percent each of the total suburban growth.
“Unlike its peers, Phoenix’s suburban office market is unique in that it has historically outperformed downtown,” said Kevin Calihan, a corporate office specialist with CBRE’s Phoenix office. “Low vacancy rates and inventory levels bode well for the market’s continued strength.”
In the Phoenix market, suburban areas such as Chandler, Gilbert and Tempe have seen technology and creative companies land space.
“Although suburban office growth is expected to moderate in the next few years, we believe the market still has further room to run. Many suburban markets are positioned for further occupancy and rent gains due to continued demand and lack of available supply, especially newer, high-quality product,” said Cross.
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