To read the full report on Tucson’s Office market activity in Q2, click here
In Q2 2026, Tucson’s office market continued to improve, with vacancy stay consistent at 8.5% and year-to-date net absorption totaling 190,925 square feet (sf). While vacancy remains above pre pandemic levels, leasing activity remained steady and demand continued to strengthen.
Defense, government, and healthcare users remained the primary drivers of leasing activity. A new lease of 27,228-sf at 9070 S. Rita Road highlighted continued tenant demand. Vacancy continued to be higher in Class A and B properties than in Class C properties, reflecting tenant demand for more cost-effective space. Downtown and the Foothills continued to outperform the broader market, while Central Tucson experienced rising vacancy due to its aging inventory.
Development activity remained limited, with most new construction consisting of build-to-suit projects as speculative development continues to be constrained by construction costs. A notable completion during the quarter was the 72,247sf building at 820 E. Tucson Marketplace Boulevard to Tucson Rehabilitation Hospital.
Average asking rents increased to $24.81 per square foot (psf), with rent growth continuing across the market as new, high-quality space remains limited. Market conditions remained relatively balanced, though tenants continued to seek value and landlords remained competitive in lease negotiations.
Investment sales continued to be led by medical and healthcare users, while capitalization rates increased from 7.6% to 8.4%, reflecting more conservative underwriting. Larger vacant office properties remained under pricing pressure, highlighted by the sale of 100-150 North Tucson Boulevard, a 120,000 sf call center to Larsen Baker for $27.50 psf. As well as 1010 North Finance Center Drive, a 48,672 sf sale for $96.41 psf.
