As we head into the final stretch of the year, one of the surprises is a resurgence in the office sector. It appears that we have reached a bottom from a pricing perspective, at significantly discounted levels—in some cases, as low as 10% of replacement cost for the properties that are selling. Northern California has been ahead of the pack, with many premium office property sales in San Jose leading to nearly $2 billion in volume in the past year, but it is clear that there is a trickle-down effect in Phoenix. The market has reached the point where prices are unlikely to go lower, and the economics are favoring ownership rather than leasing space.
Phoenix does not have as many large businesses as Silicon Valley, capable of purchasing multi-tenant office buildings and converting to owner occupant use, but there are exceptions, such as UHaul’s purchase of Central/Thomas last year. The other piece of the dynamic is large companies moving their headquarters to Phoenix, such as the Kellwood deal on the Monroe building downtown, to capitalize on the city’s affordability and favorable business climate. Some new data points that illustrate the emerging strength: According to Commercial Café, Phoenix experienced its first increase in average sales price per square foot in more than three years, rising from $165/SF in 2024 to $197/SF in 2025. In a recent report by Green Street, Phoenix ranked in the top 10 cities for commercial office sales in the $5 million to $25 million range.
This month’s headline deal in the space was Southwest Value Partners’ acquisition of seven class A properties across the Valley—a phenomenal nod from the investment community that good quality assets are there for the taking. The $296 million deal totals 1.53 million SF, adding to the firm’s Arroyo office campus in North Tempe.
Note: The majority of the build-to-suit/industrial land in the Deer Valley area is listed at an undisclosed price. However, those with listed prices are in the $25/SF–$35/SF range.
As with any hot corridor, at some point many operating businesses and investors may find themselves getting priced out of the market. Already, we are seeing a trend towards businesses looking for alternative, more economically favorable locations, including outlying areas such as Maricopa, Casa Grande, and Eloy. Most of the activity is in land with economic potential, rather than spec building or purchases of existing structures.
You can read all the details about the commercial real estate industry in the R.O.I. Properties “Real State – Commercial” newsletter, with additional statistics, market trends and information.
Note: The majority of the build-to-suit/industrial land in the Deer Valley area is listed at an undisclosed price. However, those with listed prices are in the $25/SF–$35/SF range.
As with any hot corridor, at some point many operating businesses and investors may find themselves getting priced out of the market. Already, we are seeing a trend towards businesses looking for alternative, more economically favorable locations, including outlying areas such as Maricopa, Casa Grande, and Eloy. Most of the activity is in land with economic potential, rather than spec building or purchases of existing structures.
You can read all the details about the commercial real estate industry in the R.O.I. Properties “Real State – Commercial” newsletter, with additional statistics, market trends and information.