To read the full report on Tucson’s Industrial market activity in Q2, click here
In Q2 2026, Tucson’s industrial market remained stable, with vacancy holding at 7.8% as recently completed projects continued to lease. Demand remained steady, supported by consistent absorption despite a modest increase in vacancy over the past year.
Defense, mining, and manufacturing users continued to drive leasing activity throughout the market. Notable transactions included a 43,065-square-foot(sf) renewal at 1625 S. Euclid Avenue by Walnut Industries, Inc. As well as a new 31,405-sf lease at 6223 S. Palo Verde Road by Midstate Mechanical, LLC, reflecting continued expansion among industrial occupiers.
Development activity slowed during the quarter as most large projects completed within the past year remain in lease-up mode. While no major projects were delivered in Q2 2026, Provident is expected to begin construction on a new Class A logistics development at the southwest corner of Valencia and Palo Verde.
Average asking rents remained stable at $11.02 per square foot (psf) per year, or $0.92 psf per month NNN, with market conditions generally balanced as newer industrial projects competed for tenants. Limited available inventory of owner-user buildings under 20,000 square feet and investment properties continued to support strong pricing when placed on the market.
Sales activity remained healthy, with sale pricing showing modest upward pressure. A notable transaction during the quarter was the sale of 3430 E. 36th Street, a 123,394- square-foot industrial property that traded for $8.6 million. Continued expansion by major regional manufacturers, including companies relocating operations from California and expanding cross-border distribution, is expected to support future industrial demand. In addition, interest from companies based in Mexico, particularly, Sonora, remains strong, however, largely tempered due to uncertainty around USMCA negotiations. We expect that once these negotiations are finalized, increased clarity will lead to industrial sale and leasing activity.
