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In Q4 2025, Tucson’s retail market remained stable, with vacancy improving to 5.8%, reflecting steady tenant demand and tightening availability. Market fundamentals remained balanced, supported by limited new supply and targeted expansion across key retail categories. Smaller-format spaces were in limited supply, particularly in affluent submarkets, reinforcing competitive conditions for shop-space users. Elevated construction costs limited speculative development, keeping supply growth muted.
Leasing demand was led by healthcare-related tenants, restaurants, discount retailers, and fitness users. Affluent submarkets including Foothills, Oro Valley, and Marana continued to outperform, benefiting from strong household incomes and limited availability. Consumer spending held strong, particularly within food and beverage concepts, supporting leasing momentum across neighborhood and community retail centers. Adaptive reuse activity was selective, with most big-box vacancies absorbed by discount retailers rather than alternative uses.
Retail lease rates increased by 1.8% in Q4, reflecting modest growth across the broader market. Meanwhile, premium submarkets such as Foothills recorded significantly higher rents. Limited new construction and low vacancy in core retail corridors supported landlord pricing power, while less competitive street-side locations experienced minimal rent growth. Sales activity remained steady, highlighted by the sale of the 22,960-square foot building at 5251 E Speedway for $3.5 million. Overall pricing remained balanced, with continued upside in well-located assets.
