The Tucson Commercial Real Estate Market

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Tucson, Arizona, represents a fast-growing metropolitan with ample commercial real estate investment options for principals and searching tenants alike.

As the state’s second-largest city, Tucson hosts a sizable inventory of land and other commercial property. The city’s fast-growing population and employment rate point to promising opportunities for investors considering Tucson property for sale. Crexi aids property seekers with straightforward technology tools to find the best Tucson commercial real estate for their unique needs.

Additionally, Tucson commercial brokers harness Crexi’s robust lead management software and marketing tools to maximize their business and effectively engage buyers and tenants nationwide. Using Crexi’s broker tools suite, commercial agents in Tucson save time, connect with more leads, and close on more listings.

At this time of writing, Crexi’s digital marketplace has facilitated over $540 billion in CRE transactions and showcased listings totaling over $5 trillion in property value.

Crexi proudly serves Tucson, Casas Adobes, Vail, Marana, Oro Valley, and Pima County as the MSA’s fastest-growing digital CRE platform.

Downtown Tucson's commericial real estate district

The State of Tucson Commercial Real Estate 

Tucson is nestled in the heart of the Sonoran Desert in the southern part of Arizona. As the second-largest city in the state, it is strategically located near Mexico and Southern California. 

The thriving economy is underpinned by a robust job market, primarily driven by sectors such as education, defense, technology, and healthcare. The University of Arizona and Davis-Monthan Air Force Base, two of the city’s largest employers, contribute to its expanding workforce.

The city is also a haven for outdoor enthusiasts, offering an array of recreational activities, from hiking in the majestic mountain ranges to exploring the unique flora and fauna of the desert landscape. Additionally, the area’s rich history and vibrant arts scene are major tourist draws. 

Tucson’s relative affordability, particularly when compared to California, makes it an appealing destination for both individuals seeking a cost-effective lifestyle and businesses looking for a dynamic yet affordable environment. 

Downtown Tucson at night, in front of the AC Hotel

Tucson Regional Breakdown

Tucson’s population has been on a steady growth trajectory, with the metropolitan area growing by 1.3% from the previous year. Key drivers include the city’s diverse economic opportunities, cultural appeal, and lower living costs than many other metropolitan areas. However, the area’s growth rate is slower than other parts of Arizona, indicating a more measured pace of expansion.

  • The Tucson MSA is home to more than 1 million and nearly 550,000 in the city limits.
  • The population increased by 1.3% in 2022, according to MAP.
  • Central suburbs of Tucson include Oro Valley, Marana, Sahuarita, and South Tucson.
  • The cost of living is lower than the US average and the average for Arizona.
  • The median age is 39.6, about the same as the figure for the state and the country.
  • Per capita income is $37,595, and median household income is $64,014, both statistics about 90% less than the average in the US. 
University of Arizona in Tucson football field during a game

Tucson Job Market

The Tucson metro area has seen a steady increase in job growth. The high-tech industry is a significant player, with firms like Raytheon Missile Systems and Texas Instruments providing numerous jobs. In addition, small businesses and startups play a crucial role in driving economic growth and creating job opportunities.

  • GDP for Tucson is $50.2 billion, up from $35.1 billion in 2011.
  • The unemployment rate is down to 4.4% as of August 2023, according to the US Bureau of Labor Statistics (BLS).
  • Tucson’s job growth is projected to be 1.6% annually in 2024 and 2025.
  • The proximity to Southern California and Mexico attracts numerous businesses and industries, serving as a crucial hub for international trade and commerce.
  • Largest employers include the University of Arizona, Banner Health, Arizona Public Service, ADP, Caterpillar, ASARCO, American Express, Freeport-McMoRan, Raytheon Missile Systems, Davis-Monthan AFB, and Boeing.
  • Tucson is recognized as a national leader in aerospace and defense, photonics and optics, and renewable energy and natural resources.
  • Over 37% hold a bachelor’s degree or an advanced degree, about 10% higher than the rate in Arizona.

The region’s transportation infrastructure includes Tucson International Airport (TUS) and major interstates like I-10 and I-19, providing significant connectivity for residents and businesses. Cities within a one-day drive include Phoenix, Las Vegas, San Diego, and Los Angeles.

A historic landmark in Tucson, Arizona

Tucson Industrial Market

The Tucson industrial market is experiencing notable growth, with a significant increase in space deliveries marking a recent high. However, the market has seen a rise in vacancy rates. Despite this, tenant activity in key submarkets like the Airport and Northwest has driven net absorption back into positive figures, creating a resilient and active market.

Market overview (CBRE Q3 2023

  • Inventory: 41,949,857 SF
  • Vacancy rate: 5.9%
  • Absorption:  154,628 SF (YTD)
  • Key leases by tenant: Better Box, ATI Restoration
  • Under construction:  274,889 SF 
  • Largest submarkets: Southeast, Airport, Northwest, West Central

Crexi Intelligence

These are the most recent industrial lease and sales trends from Crexi Insights (as of November 2023):

For Lease (active)

  • Asking rate/SqFt (median): $10 per year
  • Median SqFt/listing: 9,610
  • Days on market: 217
  • Total listings on Crexi: 158 spaces

For Sale (active)

  • Median asking price: $2.12 million
  • Price/SqFt: $127
  • Asking cap rate: 5.5%
  • Days on market: 222
  • Total listings on Crexi: 39

Sales Comps (past 12 months)

  • Median sold price: $600,000
  • Sold price/SqFt: $105
  • Total sales volume: $123 million
  • Sold cap rate: 7.1%
  • Median SqFt sold/transaction: 6,296
  • Total SqFt sold: 1.01 million 
  • Days on market (median): 185

Discover Tucson industrial space for rent.

Tucson Office Market

Tucson’s office market is recovering post-pandemic, led by medical users, with affluent submarkets seeing strong demand and longer lease terms. While rising interest rates and economic uncertainties present challenges, private buyers and owner/user deals keep the market active. With limited construction activity preventing oversaturation, the region maintains competitive pricing.

Market overview (Cushman & Wakefield Q3 2023)

  • Inventory: 28,893,292 SF
  • Vacancy rate: 8.9%
  • Absorption:  303,558 SF (YTD)
  • Key leases by tenant: Pima Heart Surgical Center, Safelite Auto Glass, Total Quality Logistics, Kazal Fire Protection 
  • Under construction: 130,000 SF
  • Largest submarkets: Central, Downtown, North/Oro Valley, Southwest

Crexi Intelligence

Obtaining real-time data on the Tucson office market is made possible by Crexi Insights. As of November 2023, here are the most recent trends in Tucson office leasing and sales:

For Lease (active)

  • Asking rate/SqFt (median): $19 per year
  • Median SqFt/listing: 2,116 SF
  • Days on market: 339
  • Total listings on Crexi: 585 spaces

For Sale (active)

  • Median asking price: $1.29 million
  • Price/SqFt: $205 
  • Asking cap rate: 6.3%
  • Days on market: 216
  • Total listings on Crexi: 90

Sales Comps (past 12 months)

  • Median sold price: $500,000
  • Sold price/SqFt: $176
  • Total sales volume: $146 million
  • Sold cap rate: 6.2%
  • Median SqFt sold/transaction: 3,645 SF
  • Days on market (median): 221

Discover Tucson office space for rent.

A few from the hills of downtown Tucson, Arizona and its skyscrapers

Tucson Retail Market

The retail market in Tucson remains resilient even amid economic uncertainties, particularly in food, beverage, and health-related industries. Development projects are often built for user-specific needs like restaurants and drive-thru pads. The market continues to see a positive consumer spending trend, indicating a promising retail environment in the upcoming years.

Market overview (Cushman & Wakefield Q3 2023

  • Inventory: 55,973,625 SF
  • Vacancy rate: 5.6%
  • Absorption:  569,684 SF (YTD)
  • Key lease transactions by tenant: Blossom Living, Workout Anytime, Suvida Healthcare, Hounds Town
  • Under construction: 35,565 SF 
  • Largest submarkets: East, Central East, Central West, South, Foothills

Crexi Intelligence

Tucson retail lease and sales trends from Crexi Insights (as of November 2023):

For Lease (active)

  • Asking rate/SqFt (median): $18 per year
  • Median SqFt/listing: 2,350 SF
  • Days on market: 350
  • Total listings on Crexi: 695 spaces

For Sale (active)

  • Median asking price: $1.47 million
  • Price/SqFt: $209
  • Asking cap rate: 5.9%
  • Days on market: 243
  • Total listings on Crexi: 89 

Sales Comps (past 12 months)

  • Median sold price: $757,000
  • Sold price/SqFt: $184
  • Total sales volume: $527 million
  • Sold cap rate: 6.1%
  • Median SqFt sold/transaction: 3,707 SF
  • Days on market (median): 97

Learn more about Tucson retail space for lease.

An overhead drone view of Tucson single family rentals

Tucson Multifamily Market

Tucson’s multifamily market presents a mixed performance, with increasing rents and rising vacancy rates. Development activity remains robust, with a healthy supply of units. Despite lighter sales activity, the market continues to attract investors, maintaining a balance between growth and stability.

Market overview (Northmarq Q2 2023)

  • Total housing units: 479,654
  • Multi-unit: 110,320
  • Vacancy rate: 8.1%
  • Asking rents: $1,182
  • Rent growth: 2.0% year over year
  • Under construction: 3,799 units
  • Key sales by property: Palo Verde Terrace $3.85 million, Coronado Vista Courtyard Apartments $3.8 million

Crexi Intelligence

Here are the most recent multifamily Insights from Crexi (as of November 2023):

For Sale (active)

  • Median asking price: $1.33 million
  • Price/SqFt: $206
  • Price/Unit: $95,500
  • Asking cap rate: 5.9%
  • Days on market: 139
  • Total listings on Crexi: 22

Sales Comps (past 12 months)

  • Median sold price: $408,000
  • Sold price/SqFt: $176
  • Sold price/unit: $150,000
  • Total sales volume: $270 million
  • Sold cap rate: 8.4%
  • Total SqFt sold: 1.44 million
  • Days on market (median): 58

Discover Tucson multifamily property for sale.

Get more in-depth Tucson market data with Crexi Intelligence.

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Shanti Ryle
Shanti Ryle

Content Marketing Manager

Shanti leads Crexi's content marketing strategies with 7+ years of content development experience, creating everything from blog posts to award-winning podcasts. Previously, she worked on content teams at Snapchat, Weedmaps, and HopSkipDrive as well as developed copy, articles, and media for freelance publications.

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