Phoenix Market Perks Up with 205,100-SF Lease
- Apr 25, 2011
April 22, 2011
By Barbra Murray, Contributing Editor
The Phoenix office market is hardly making a speedy recovery, but transactions like the Phoenix School of Law’s new lease of 205,100 square feet for its expansion and relocation to The Tower at One North Central downtown continue to pave the market’s bumpy road to recovery.
Once known as the Phelps Dodge Tower, the 10-year-old One North Central encompasses 410,000 square feet of Class A office accommodations and sits within a large legal community that includes major law firms, as well as courthouses from the municipal to the federal level. And the school will blend right in with One North Central’s current tenant roster. The property is home to a bevy of law firms and such government entities as the Arizona Bureau of Land Management and the U.S. Department of Housing and Urban Development.
PhoenixLaw signed on to occupy space on the 13th floor through the 20th floor–the very top of the high-rise–and part of the first level, under a 10-year lease agreement that provides one five-year lease extension option. The deal allows the school to move its administrative and educational facilities to digs providing more than twice the amount of space it presently occupies at 4041 N. Central Ave.
Commercial real state services firm Cushman & Wakefield represented PhoenixLaw in the lease transaction, while Colliers International stood in for Mitsubishi Estate New York Inc., owner of the property since 2008. Financial terms of the agreement were not disclosed; however, Colliers is marketing remaining space in the building at $27 per square-foot.
Moving day for PhoenixLaw is August 1, and while the school will leave behind approximately 100,000 square feet of vacant space, its commitment to much larger accommodations at One North Central suggests the market will experience positive absorption. And more absorption is just what the Phoenix office market needs.
In the first quarter of the year, metropolitan Phoenix experienced negative absorption totaling just under 372,800 square feet. The total average vacancy rate was 22.1 percent for all property classes and a notably higher 25.2 percent for Class A facilities. On the bright side, vacancies have been inching down, bit by bit, in a steady decline over the last year, going from 22.5 percent in the first quarter of 2010 to 22.1 percent in the first quarter of 2011. “The Phoenix office market will be slow to transition into recovery mode, as vacancy, while forecast to decline, will remain well above market equilibrium levels for the next several quarters,” Colliers notes in a recent report.