Each year since its 2005 Tucson commercial real estate market entry, Costar, the leading provider of industry market intelligence, has tracked and awarded the highest-producing companies and individuals in the Tucson marketplace.
PICOR Connect | Trends in Commercial Real Estate
A short time ago, in modern America, there were some maxims that simply applied at all times. After a solid 60 years of suburban expansion in the Automobile Age, it seemed like “retail follows rooftops” and “drive until you qualify” were principles of urban expansion and of real estate development that were immutable and everlasting. Cheap energy, our reliance upon automobiles, and our vision of the American Dream created a long-lasting and frenetic drive to suburban and exurban communities.
Metro Tucson ended November with a total of 372,000 non-agriculture jobs, gaining 5,200 jobs year-over-year (YOY), an annualized job growth rate of 1.4%. Personal income rose 2.7% locally over a year earlier, while statewide retail sales were up 1.9% YOY. Tucson home prices ended 2014 with a respectable 4.6% gain in median selling price.
With an improving national economic and employment picture slowly lifting all boats, the Arizona and Tucson employment rates followed suit; statewide employment was up 2.1% over a year ago. Residential inventory continued to stabilize and median sale prices gained 6.2% over prior year. Shared Services Center’s expansion announcement netting 200 new jobs made a positive statement about Tucson as a location to service western states.
Overall, we remain confident that consumers will continue to increase spending at a healthy clip, which will boost the need for both retail and industrial space int he coming year.
At 2014's midway point, the Tucson retail market continued its positive performance. Read more, as we detail the highlights for the quarter.
Stronger employment and income growth are boosting the rate of growth of consumer spending. That’s great news for the economy. Consumer spending accounts for 68% of total gross domestic product. Stronger consumer spending growth means stronger economic growth. This is an important element in our forecast for much stronger economic growth over the next 12 to 18 months. It also suggests that the commercial real estate sector will continue to improve.
The purpose of this report is to show the strengths and weaknesses of Tucson, Arizona and its sister cities, Albuquerque, New Mexico and El Paso, Texas. The three cities are sisters since they have many commonalities including climate, population size, and each city having a military base and a university. The stats and data shown herein are used to illustrate the bigger picture and may not reflect exact figures.
Tucson is about 60 miles north of the US-Mexico border and about 100 miles south of Phoenix, Arizona. The metropolitan population is about 1 million but the 2010 US Census Bureau reports a population of 520,000. Major industries in Tucson include Defense/Aerospace, Healthcare, and mining. Tucson does not have any major sporting teams beyond those associated with the University of Arizona. The current real estate trends include the build-up of downtown with new office buildings, street-car, student housing, restaurants, and retailers.
The major difference between Tucson and its sister cities is that it is in the shadow of a much larger city. The Phoenix metropolitan area is about 4 million people and has sports venues, a legitimate international airport, corporate industries, loop freeways, and a light rail line.
A continued rebound in consumer confidence, both nationally and locally, has fueled positive momentum in the Tucson retail market. Other market drivers have been material to the overall health of the retail market. These include an increase in housing demand, marked decrease in foreclosure filings, and national recognition for Tucson’s secondary education, with two local high schools ranked in the country’s top ten, as well as a National Blue Ribbon high school.
Despite fewer shopping days in the critical holiday season, retail spending was up 3.5% nationally, aided by deep discounts by retailers. In the Tucson housing market, residential sales volume and median prices ended the year higher (14.0% and 7.1%, respectively), as positive recovery continued.