- Michael J. Alter
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Phoenix and Chicago on the “Top 20 Markets for Office Growth” List
Phoenix and Chicago were #7 and #16 on Wealth Management’s “Top 20 Markets for Office Rent Growth.” With flagship office developments in both markets, Alter has seen a spike in activity over the last year. In Phoenix, office rent growth from second quarter of 2019 to second quarter of 2021 was 8.3%. This even exceeds pre-pandemic office rent growth from second quarter of 2017 to second quarter of 2019 in Phoenix, which was 7.5%. Alter is seeing more activity at its Riverwalk at Talking Stick development, an exclusive business and lifestyle community near Phoenix. One of the country’s largest developments on Native American land, Riverwalk at Talking Stick will yield an estimated 1,500,000 SF of corporate office and retail space and create nearly 15,000 new jobs.
Similarly, in Chicago, office rent growth from second quarter of 2019 to second quarter of 2021 was 3.6%. However, unlike Phoenix, Chicago hasn’t matched pre-pandemic levels yet — office rent growth from the second quarter of 2017 to second quarter of 2019 was 5.7%. According to CBRE’s Chicago Office CBD Q3 2021 Report, the third quarter saw increased transaction volume as a diverse set of tenants recommitted to the long-term importance of office space. Despite this activity, direct vacancy increased 40 basis points (bps) to 18.1%, a record for CBRE’s 15-year data set, and net absorption is improving but has a long way to go, posting -359,048 SF for the third quarter of 2021.