By Rick Kleiner
The Trend Report, October 2024 Edition
As we consider the state of the Tucson office market, I’m reminded of the famous quip by a very-alive Mark Twain when he read unfounded stories of his demise, “The reports of my death are greatly exaggerated.” Certainly, the Tucson office market has been impacted by the advance of hybrid work and current economic headwinds. That said, I think there are both challenges and opportunities for owners, tenants, investors, and brokers.
The following ready-to-send tweets provide my snapshot of key trends:
In my current experience I’m finding that landlords are employing a variety of creative strategies influenced by hybrid work models to market office space. These strategies aim to attract tenants despite the challenges presented by increased vacancy rates and changing tenant requirements, including:
- Flexible Lease Terms: Landlords are increasingly providing flexible lease terms to attract tenants. This includes shorter lease durations, which are more appealing to companies uncertain about their long-term office space needs due to hybrid work arrangements.
- Significant Tenant Improvement Allowances: Landlords are offering substantial tenant improvement allowances coupled with 7- and 10- year lease terms.
- Targeting Medical Tenants: In light of the strong demand for medical offices, landlords are targeting medical tenants who are often willing to undertake conversions themselves or agree to longer lease terms.
- Enhanced Amenities & Services: To differentiate their properties landlords are enhancing the tenant experience with improved common areas, on-site fitness centers, advanced technological infrastructure and other features that support a hybrid work environment.
- Highlighting Location Benefits: Landlords are emphasizing the benefits of their properties’ locations, particularly in high-demand submarkets such as the Foothills, Central and Northwest Tucson.
In looking to the future, the Tucson office market is navigating the challenges posed by hybrid work with a stable yet evolving landscape. I’ll close by paraphrasing Mark Twain that the Tucson office market is alive, adapting and resilient! I look forward to another exciting year ahead.
Rick Kleiner is a shareholder of Cushman & Wakefield | PICOR and specializes in the sale, leasing and investment of office and medical properties. Rick is distinguished by his extensive sales background and related education, including his MBA from the University of Arizona. Rick has been the Top Office Division Producer for the past fifteen consecutive years and amongst the company’s top three annual producers for ten of the past fifteen years. Rick was awarded C & W | PICOR’s 2019 President’s Award for Excellence in recognition of his role in company leadership. Rick is a five-time winner of the annual Commercial Real Estate Competition among all Tucson office brokers sponsored by the Southern Arizona CCIM Chapter. Rick has been associated with C&W | PICOR since undertaking his commercial real estate career in 1995. Prior to this affiliation, Rick served as Vice President of Marketing for Up With People, the international not-for-profit organization. Rick is married to Jan Miller, a Tucson native. They are the parents of Sam, an attorney in, Washington DC, and Emma, an attorney practicing with the University of Arizona Office of the General Counsel, in Tucson AZ. Rick Kleiner can be reached at rkleiner@picor.com.
Sources: PICOR Q2 Office MarketBeat, perplexity.ai
