Phoenix and Tempe expected to lead commercial real estate rebound

There are continued indications that when the commercial real estate market awakens from its recession-induced slumber that downtown Phoenix and Tempe’s Mill Avenue will sound the wake-up call. A first quarter analysis of the Phoenix-area office market by Lee & Associates Commercial Real Estate Service shows the Valley’s office vacancy rates at 27 percent. That’s still an elevated rate, but there are hopes for a rebound in downtown Phoenix and Tempe. The Lee report says downtown Phoenix has limited supply of Class A blocks of space of more than 20,000 square feet. The same report says RED Development’s CityScape office tower is 92 percent leased. The office building is home to a number of law firms as well as Phoenix Suns owner Robert Sarver’s Alliance Bank. The Lee report says Chicago-based developer Golub & Co. is still looking to develop a new office building on a parcel it owns in downtown Phoenix at Van Buren Street and 3rd Avenue. Golub was one of the Scottsdale Waterfront’s developers. There is also continued speculation about the future for the parking lot pad in between Collier Center and CityScape, and a block of older buildings along Washington Street in between 1st and 2nd streets. In Tempe, Ryan Cos. wants to build a third, 245,000-square-foot office tower at Hayden Ferry Lakeside on the northern end of downtown. The Lee report said like the Golub plans in Phoenix, a new Tempe development hinges on securing tenants.

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