By Recker McDowell —
The office market keeps getting tighter and tighter, especially in Scottsdale, Chandler and Tempe where employers and their workers want to locate.
Simply put, those three are markets as well as downtown Phoenix need more new office space to keep up with demand and to keep bringing quality jobs to the region.
The regional office vacancy rate for Class A space is around 10 percent. And it is even lower in prime areas such as downtown Tempe and Chandler’s Price Road Corridor.
Employers have their eyes on those employment hubs as well as popular areas of Scottsdale. The challenge is just finding them the space they need and having the right space available at the right time. Tenants, especially big national and international tenants, will not wait around for space to be built or to come available.
So, having enough office space to land in is paramount in site selections.
That has been a challenge for downtown / Old Town Scottsdale as well as Chandler’s Price Road Corridor. Some technology and other prime tenants have ended up landing in other places because they couldn’t find the amount of office space they needed in Scottsdale and Chandler.
The result has been some companies landing jobs in Gilbert when they couldn’t find space in Chandler and Tempe and Phoenix when they couldn’t find enough space in Scottsdale.
The real estate sector has taken it slow after Arizona and metro Phoenix got scorched during the Great Recession. Less speculation and going with mixed-used projects have been prudent.
The potential problem is the region — especially its popular spots and employment hubs — might be missing out on site selections, business locates and jobs.
And, some of those companies who couldn’t find space in Scottsdale, Chandler or now Tempe are landing instead in Salt Lake City, Denver, Charlotte or Texas.
Developers, city planners and elected officials need to keep the need for office space in mind as they plot out projects and visions for our communities. That includes downtown Phoenix where apartments and adaptive reuse warehouses have done well but there will also be new office space needs. It also includes Gilbert which is growing into an employment hub and sees the potential for creative office space at its Heritage District restaurant row.
Office space, especially if done right, bring jobs. That means tax revenue but also office workers (including professional, creative and technology ones) who can help surrounding restaurants, shops, coffee shops and happy hour spots thrive. Just look at what the technology and creative companies and workers in Old Town Scottsdale have done to help restaurants and coffee shops.
Being prudent and diversified has helped the region navigate the waters during this economic and lengthy expansion. But the parts of the region should realize there are reasonable growth projections for office space and there are reasonable paths to help supply keep up with demand.