To read the full report on Tucson’s Office market activity in Q4, click here
In Q4 2025, Tucson’s office market showed modest improvement, with vacancy declining slightly as absorption increased relative to prior quarters. While overall vacancy remains above balanced levels, leasing momentum improved, supported by steady tenant demand.
Healthcare continued to be the primary driver of office absorption. Medical users accounted for the majority of leasing activity during the quarter, supported by strong balance sheets and long-term space requirements. The most notable lease transaction was ACP’s 20,928 square foot (sf) property at 4801 East Broadway, reinforcing healthcare’s role as the leading source of demand.
Submarket performance remained uneven. The Foothills continued to outperform due to low inventory and sustained demand, while East Tucson recorded higher-than-normal absorption. Downtown Tucson activity remained mixed, constrained by parking limitations and aging building stock. Construction activity remained limited, as high costs and rental rates that do not support new development continue to restrict speculative office projects, with new construction largely confined to medical office.
Lease rates remained largely unchanged in Q4. The Foothills experienced slight upward pressure due to limited availability, while other submarkets remained stable. Lease terms typically ranged from three to five years, with landlords offering property-specific incentive packages to facilitate transactions. Tenant demand continued to favor smaller, well-located spaces in newer or well-maintained buildings.
Sales activity remained subdued due to economic uncertainty and pricing expectations, with limited transaction volume. Investor activity was constrained, with most completed deals driven by owner-users. The most notable transaction was the sale of 1401 S Pantano Road, a 47,531 sf property sold at $3,800,000 to Airtronics.
