In Rare Big-Block Phoenix Office Lease, Cognizant Takes 130,700 SF

The worst may be over for the struggling Phoenix office market, where vacancy edged up only 10 basis points to 22.9 percent from the first to the fourth quarters last year.

Making a big-block commitment that is still rare for the Phoenix office market, Cognizant has signed on to occupy 130,700 square feet at Canyon Corporate Plaza II. The technology consulting company claimed most of the approximately 134,000-square-foot building, which is owned by Northridge Capital L.L.C., to accommodate a pressing need for elbow room.

The Cognizant deal is a welcome anomaly for a market that is still struggling to recover.  “There has been some pickup in activity; we think the market has hit bottom,” said Johnathan Lindley, Transwestern’s west region marketing director.  Indeed, signs suggest that the worst, at least, is over. From the first through the fourth quarters last year, the vacancy rate edged up only 10 basis points, settling at 22.9 percent. That marked the smallest increase since late 2007, according to Transwestern’s figures.

Despite those positive indicators, however, market experts do not expect new 100,000 square-foot-plus leases to start cropping up regularly in Phoenix any time soon. “People are willing to test the market, but I don’t think we’ll have a significant uptick in 2011,” Lindley said. Instead, he predicted, “We will start to see a slow, cautious recovery.”

Carrying the address of 2512 W. Dunlap Ave., Canyon Corporate Plaza II became part of Northridge’s portfolio in 2005 as part of a two-building acquisition that also includes Canyon Corporate Plaza I. The Class A office complex sits adjacent to the Sheraton Crescent Hotel & Conference Center and is located a few minutes from Sky Harbor International Airport.

Terms of Cognizant’s 12-year lease have not been disclosed. However, commercial real estate services firm Transwestern, which represented the landlord in the transaction, is marketing space at the property for $21 per square-foot. Studley and Ross Brown Partners Inc. stood in for the tenant.