During Q2, overall activity remained static despite more workers returning to the office. National companies were more likely to insist on a return to the office while local employers took more time to work alternatives.
The healthcare sector continued swiftly and accounted for much of the strength in Tucson’s office market, also marked by the notable opening of Northwest Medical Center’s hospital. Only two leases over 10,000 square feet (sf) were reported in Q2.
In another shift to respond to market dynamics, the strength of the industrial sector is prompting some owners of larger office buildings to consider reverting spaces into distribution and warehouses where possible. Downtown Tucson continues to be strong, supported by Rio Nuevo funding, fueled by the streetcar and continued residential development in the city core.
Sales prices per square feet (psf) have increased consistently each quarter, now at $116.00 psf Q2 (a 9% YOY increase). Lease rates in the northwest continue to climb with some multi-tenant spaces getting $1.00 psf.