A silver lining for downtown Phoenix office space

As the Phoenix office market collapses, downtown's share of the smaller pie keeps growing. CB Richard Ellis reported that in the fourth quarter of 2008, downtown Phoenix's office vacancy rate climbed to 12.8%, but that figure still was better than all of downtown Phoenix's major competitors (midtown Phoenix was at 16.0%, the Camelback Corridor had a vacancy rate of 17.8%, and the Scottsdale Airpark and north Scottsdale markets checked in with whopping vacancy rates of 24.4% and 28.8%, respectively).

In the meantime, downtown Phoenix was one of the few submarkets to add space, as Central Park East and the CityScape office tower construction progressed. Downtown is poised to add more than one million square feet of Class A office space, more than double any of the other Phoenix-area submarkets. That construction will help downtown surpass midtown Phoenix in terms of overall Class A office space, and cause downtown to become the third-biggest Class A office submarket in greater Phoenix. In fact, downtown Phoenix would have become the biggest Class A submarket in the Phoenix area had the Camelback Corridor and Scottsdale Airpark not been in the midst of their own office building projects.

While downtown Phoenix has always been a decent office outpost and lagged in commercial and residential options, adding more people to the downtown mix-- even if it's just during the 9-to-5-- is never a bad thing. The big issue now will be finding tenants for all the new office space (especially at Central Park East, which currently has no tenants).