The office leasing market has been fragile for some time. Out of all the commercial real estate sectors, office seems to be last to the finish line of recovery. Overall the health of the office market is a reflection of the state of Tucson’s economy, specifically jobs.
We continue to keep a hopeful outlook on the state of the office market due to several factors affecting our economy; the biggest factor being the presence of new employers. With the introduction of thousands of new basic jobs in Tucson through these new employers, we can confidently anticipate the creation of peripheral jobs to meet the rising demand that increasing employment brings.
The best example is of course Caterpillar, Inc. moving their regional headquarters to Tucson bringing hundreds of six-figure jobs to our economy. How does this affect the office leasing market?
Caterpillar, Inc. among several other employers bringing these higher paid jobs to our region means higher demand for services in the financial, real estate and insurance industries among many others. The increase in demand leads to the increase in supply which translates to the expansion of current companies providing these services and further the creation of new companies.
What do all these companies need in order to operate? That’s right, office space! As our economy continues to grow so does the demand for office space and we are slowly starting the see the progress.
However, the relationship is somewhat skewed. It takes time for the jobs to result directly in office demand. We can expect the current economic activity to reflect changes in the office market within the next couple of years. The hope is that by then we have continued this positive trend towards a robust economy further contributing to a healthier office leasing market.
Isaac Figueroa is a native Tucsonan, active in the Tucson real estate market since 2012. Isaac specializes in the leasing, sale and development of professional and medical office properties. He is active with CCIM of Southern Arizona, Greater Tucson Leadership, Tucson Young Professionals, Urban Land Institute, and other community efforts. You can reach him at 520.546.2743 and [email protected]
Photo credit: Will Dobbs