PICOR Connect | Trends in Commercial Real Estate

As in most markets in the United States, the Tucson retail real estate market strained in the third quarter to adapt to the realities of COVID-19 era business. Some large format retailers already pressured by online retailing and changing consumer preferences have simply been unable to continue operation.

Supply in the Tucson industrial market remains stable, with only one new industrial project under construction. We do hear of numerous proposed industrial developments in the region with 5,000-10,000 square foot (sf) bays. We expect supply of small-bay industrial (under 5,000 sf) to remain consistent until rents grow by 35%-50%.

Barbi Reuter is among seven commercial real estate leaders elected to the CREW (Commercial Real Estate Women) Network global board of directors, serving in the capacity of President-Elect in 2021. The new leaders were introduced on Sept. 17 at the virtual 2020 CREW Network Convention.

CREW is the industry’s leading advocate for the advancement of women in commercial real estate, and Reuter will be the first Tucsonan to lead the 12,000 member organization when she serves as President in 2022.

Much has been written about the return to the office after the “Great Pandemic of 2020.” In March 2020 when millions of workers were sent home, speculation began about the “new workplace.” Many said working from home was the wave of the future and would spell the death of the office. Initial surveys showed that as many as 75% of workers wanted to work from home. With the elimination of drive-time, and being home with family, who wouldn’t? Even productivity seemed higher. Then, over time, started the little murmurs, that perhaps the office was not completely extinct. There was perhaps, still a need for the office and that workers wanted to return to the workplace. Recent workforce surveys demonstrate that the 75% want to return to the office, many of them younger, newer to the working world.

Amid the COVID-19 pandemic, more than 11,000 businesses in Arizona and 1,300 in Tucson received economic relief from the federal government. While Arizona posted one of the sharpest unemployment drops in the country in May, it increased in June from 9% to 10%. On a positive note, The University of Arizona reopened with a mixture of online and in-person classes on August 24^th, and LendingTree.com named Tucson the number one searched market for “homes for sale” during the pandemic in the U.S.

Last week, Cushman & Wakefield | PICOR principal and office properties specialist Rick Kleiner joined the Back to Business Radio Show and Podcast on KVOI, the Voice, in Tucson. Hosts Rob Davidson and Alan Miklofsky had an exchange with Rick about such topics as the impact of COVID-19 on various sectors of the Tucson commercial real estate market, including office and medical, industrial, retail and multi-family properties.

This report is a snapshot of where the market is today and projects where it may be in the near future.

Yesterday, the U.S. government announced a phased plan for reopening the economy. Over the next several weeks and months, as areas stabilize from the COVID-19 pandemic and stay-at-home restrictions are lifted, organizations will begin to bring workers back into the physical workplace. As many media outlets reported, Cushman & Wakefield recently launched its Recovery Readiness Task Force (RRTF) and have plans to share best practices for reopening workplaces. 

It's been a couple of weeks since we updated you on "business as unusual" at Cushman & Wakefield | PICOR. With daily changes in guidance from every level of government and deeper understanding of our responsibilities to support health at the human, property, and community levels, we have continued to flex, too.

When the going gets tough, the tough get flexible! Our resilient team of Tucson commercial brokers, property managers, and support staff are weathering these strange days with good humor and a service-first mentality.