Drive down Valley freeways and you are bound to see new office buildings rising in the skyline. A vast majority of them are taking shape in the Tempe area.
According to the Greater Phoenix Office Research Forecast Report published by Colliers International, there are currently 4.5 million square feet of office space under construction in the Valley. Nearly 3 million square feet of that are in Tempe. Another 950,000 square feet are under construction in Chandler.
"The millennials are wanting to live in Tempe and the southeast Valley, and the jobs and, in turn, the office buildings are following suit," said Todd Noel, an executive vice president at Colliers.
Noel said the millennial workforce is different from past generations in that these employees want to live, work and play in the same area. That is important because as of this year, millennials make up a majority of the workforce available to employers.
The result is that employers are now looking for office space that reflects the needs and wants of the millennial workforce.
State Farm is a prime example. The company is building a massive, 2 million square foot "workplace of the future" on the shore of Tempe Town Lake.
"We recognize that future generations of employees may have different expectations of their employer and their workplace, and we are taking this into consideration as we make facilities and business plans," wrote Victor Hugo Rodriguez, who is a media specialist with State Farm. "We know that many of our new hires prefer multiple transportation options, the ability to live near where they work and to have a more live-work-play lifestyle."
Does this mean that the older, more traditional office buildings that make up a majority of the Valley’s skyline and street views are a thing of the past? Not necessarily, according to Todd Noel from Colliers. But he says the older buildings will need makeovers to stay competitive.
Right now the Valley’s older, vintage buildings have the highest vacancy rates as millennials and their employers look for open floor plans with common areas and high-tech amenities. The northwest Valley and Central Corridor currently have the highest office vacancy rates in the Valley.
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