To read the full report on Tucson’s industrial activity in Q4, click here.
Tucson’s industrial market remains balanced with stable demand primarily driven by the market’s affordability. The vacancy rate ticked up nominally from 5.2% in Q3 to 5.4%, largely due to new speculative deliveries and the time required to absorb this new product. Logistics continued to be the primary driver of Tucson industrial demand, while a modest construction pipeline is expected to keep supply-side pressure in check, helping to stabilize vacancies.
Noteworthy lease transactions this quarter included Alorica, Inc. renewing their lease of 101,436 square feet (sf) at Tucson Commerce Center and Sundt Construction’s 32,476 sf lease at the Intuit Building to house a construction office for I-10 interstate reconstruction. Significant sales transactions included an investor purchasing a 49,000 sf warehouse for $3.6 million in Oro Valley and Friedman Recycling Co. acquiring 44,000 sf for $3.6 million in Central West Tucson.
Additionally, construction has commenced on two significant projects: TPA has officially broken ground on a 194,879 sf building in Butterfield Logistics Center, and Schnitzer Properties has announced construction on a 146,963 sf distribution and manufacturing facility at Corona Commerce Center—strategically located near the airport—one of Tucson’s most active industrial submarkets.
Investment sales transactions following the $118 million sale of Tucson Commerce Center in April 2024 have involved primarily local private investors. The most active submarkets are NW Tucson/Oro Valley, Palo Verde, and Southeast Tucson, though overall investment activity has slowed. It remains to be seen if recent interest rate cuts will reactivate this sector. The average price per sf was $115, with cap rates averaging 7.0%.
