To read the full report on Tucson’s industrial activity in Q2, click here.
Tucson’s industrial market remained tight in Q2 2025, with vacancy persisting at 5.7%. Most available space was in large-bay buildings or projects, while small bays under 50,000 square feet (sf) remained near full occupancy. Significant speculative construction is underway in the Airport and Northwest submarkets, including Butterfield Logistics Center set to deliver 194,879 sf in Q3, Corona Commerce Center with 146,963 sf in Q4, and Drexel Commerce Center bringing 191,252 sf in Q1 2026. Expect almost 900,000 sf completed by year-end, reflecting optimism in response to absorption trends. Construction activity continued despite cost pressures on materials and labor.
A $3.6 billion data center development in southeast Tucson, potentially the largest economic development project in the region’s history, cleared its first approval with Pima County and will move through City of Tucson review stages in Q3. Key leases included Energy Logistics Inc at 777 E MacArthur (34,680 sf), EPIX Interiors at 2301 N Forbes (15,000 sf), and Sundt Construction expanding to 2700 E Drexel Commerce Center (32,681 sf).
User and investor sales remained muted due to cautious sentiment in an elevated interest rate environment. Land deals slowed, but pricing for existing assets held steady. New leases and sales were most active in the Airport, Northwest, and Marana submarkets, and longer lease terms remained common.
Average asking rents held steady at $0.84 per square feet (psf) per month, with new speculative space quoting up to $1.00 psf. Construction costs remained high, with increases in steel, copper, and concrete prices. Tariff uncertainty added volatility in both pricing and project advancement, and labor shortages and loan rates continued to pressure development budgets. Some developers relied on modular design and early procurement to control costs.
