Why Tempe’s Lakefront Remains a Magnet for Office Space Tenants
Tempe Town Lake stands out as a premium destination for office users and developers alike, drawing businesses to its shores even in a post-pandemic world where many companies are downsizing their office spaces. Despite the wider trend of reduced leasing activity, Tempe’s office market around the lake has thrived, supported by one of the highest asking rental rates in the Phoenix metro area. As of Q3 2024, the average direct lease rate in Tempe is an impressive $39.58 per square foot, according to CBRE Group.
What sets Tempe apart? New entrants to the market, including LPL Financial, Imagine Learning, and Dutch Bros Coffee, all point to the same benefits: a convenient location with short commute times, proximity to Phoenix-Sky Harbor International Airport, and access to a rich talent pool at Arizona State University (ASU). Dutch Bros, for example, secured over 135,000 square feet of office space at Liberty Center and will begin operations in early 2025. As Jess Elmquist, Chief People Officer at Dutch Bros, explains, “Tempe was an obvious choice for us, with its thriving business environment and constant growth.”
A 25-Year Success Story: Tempe Town Lake
Tempe Town Lake is celebrating its 25th anniversary, and its office market is considered the envy of the entire Phoenix Valley. Since State Farm opened its 2.1 million-square-foot campus at Marina Heights in 2015, the lakefront has solidified its position as a business hub. State Farm’s presence became a magnet for other corporate giants like Carvana, which established its headquarters nearby in 2017, drawn by the central location and ease of transportation.
Tempe’s appeal goes beyond just convenience; its vibrant business community and support from local leaders have also been key factors. Former Tempe mayors Mark Mitchell and Neil Giuliano recall how landing State Farm as a tenant required swift action and adaptability. As Mitchell shared, “We knew we had to move fast. The company was considering other locations, but we made it happen.”
Why Tempe's Lakefront is Appealing to Arizonans
For local businesses and residents alike, the appeal of Tempe’s lakefront office spaces goes beyond just location — it’s about quality of life. Arizonans value the balance between work and leisure, and Tempe Town Lake delivers this balance in spades. The area offers unparalleled views, recreational opportunities, and easy access to dining, retail, and entertainment options, making it an attractive destination for employees and businesses that want more than just an office.
Tempe’s lakefront projects also offer employees and business owners the ability to enjoy Arizona’s warm climate and outdoor lifestyle. The lake is not only a scenic backdrop but also a hub for activities like boating, paddleboarding, and jogging along the waterfront paths — all features that appeal to the active, outdoor-loving culture prevalent among Arizonans.
Moreover, the location’s proximity to Phoenix-Sky Harbor International Airport means that companies based here can seamlessly connect with national and international clients. This accessibility is crucial for growing businesses in Arizona, where the economy is thriving and opportunities for expansion abound.
Navigating Office Market Challenges
Like most office markets, Tempe has faced challenges in recent years, especially as companies shifted to remote work during the pandemic. Many businesses looked to shed office space, leading to a spike in sublease availability, which peaked in Q2 2023. Yet Tempe’s lakefront properties have proven resilient, quickly absorbing available space.
Carvana, for instance, placed nearly 300,000 square feet on the sublease market in 2023. However, LPL Financial swiftly claimed a 43,000-square-foot portion of that space in 2024, and the company has plans for further expansion. Marina Heights, where LPL is located, offered the flexibility the company needed to grow, ensuring that Tempe remains an attractive option for corporate tenants.
Another notable transaction took place at 100 Mill, one of the newest Class A office buildings near the lake. GoDaddy negotiated a direct lease to stay at the property long-term, after initially subleasing space from Moov Technologies. Imagine Learning, another tenant, recently relocated from Scottsdale to Tempe, attracted by the proximity to ASU and the ability to design a workspace that fits its needs.
Developers Continue to Invest
The strength of Tempe’s office market is reflected in continued developer investment. Cousins Properties, for example, has invested in upgrading its holdings at Tempe Gateway and Hayden Ferry Lakeside, two prominent lakeside office buildings. Although Silicon Valley Bank vacated a large portion of Hayden Ferry Lakeside I, CliftonLarsonAllen has already committed to leasing 55,000 square feet across two floors, highlighting the ongoing demand for high-quality office space.
As Jarett Brock of Cousins Properties puts it, “We believe talented companies want to gather in person, and they want to do so in top-tier buildings that offer a lifestyle environment.” With Tempe Town Lake providing stunning views and a vibrant atmosphere, it’s easy to see why companies continue to choose this location.
New Developments on the Horizon
On the north side of Tempe Town Lake, the Watermark development, led by Fenix Development, has fully leased its office spaces and is preparing to unveil new restaurant concepts to enhance the area’s appeal. Further along Rio Salado Parkway, the massive South Pier development is rising. This multibillion-dollar, mixed-use project will include luxury residential, office, and retail spaces over the next decade. Once complete, South Pier will add another 600,000 square feet of office space to the market, further cementing Tempe Town Lake’s status as a business hub.
For Arizonans, this continued growth means more opportunities to work in vibrant, centrally-located spaces while enjoying the lifestyle benefits of being near Tempe Town Lake. Whether it’s walking to lunch by the water or hosting meetings with stunning lake views, the lakefront offers a uniquely appealing environment for both businesses and their employees.
