TUCSON, ARIZONA -- Since the recession, industrial land has been sluggish as vacancy hovered between 7-12%. The market has since become so tight that now land is selling left and right. Vacant airport area land is now tough to find. Cranes are tilting walls for mid to large size distribution centers for users and speculative developers. Available industrial land is now drying up with the uptick in demand.
Available existing inventory is at an all time low with vacancy below 5% and lease rates quickly rising. The Northwest market has the highest lease rates and the least amount of vacancy. Lease rates in the Palo Verde, Ajo and Airport market are quickly catching up to Northwest rates.
The amount of available buildings for sale is at an all time low. It is definitely a seller’s market, even for functionally obsolescent buildings and buildings in need of repair. As the price per SF rises, spec buildings for sale are starting to be built. We can expect that spec buildings, mostly metal will be built as price per SF pushes towards $100 per SF.
So what is causing this rush of demand? A combination of migration from California and dense cities, the Ecommerce rush, Cannabis legalization, stimulus, and the booming demand of building materials.
When will supply catch up? Supply will begin to catch up with demand as lease rates continue to rise. Rising lease rates spur speculative development. Speculative developers have already proven that development makes sense in Tucson so now we are starting to see an increase in development activity, mostly in the distribution market. We can expect to see small bay developers start building as lease rates push north of $.80 NNN per SF. We can also expect to see large distribution centers enter the market as conventional retailers shift their models towards last mile distribution.
Are we expecting a slow down? We are not expecting a slow down as long as long as migration from California and dense cities continues and Ecommerce demand continues to grow. these are the two main demand drivers right now.
- 3238 E Columbia (3,972 SF) sold for $278,000 to 3238 E Columbia Street LLC. Max Fisher, BRD Realty represented the seller. Michael Coretz, Commercial Real Estate Group Tucson represented the buyer.
- 2310 N 9th Ave (4,000 SF) sold for $331,000 to Matthew McGinley. Max Fisher, BRD Realty represented the seller. Danny Roth, Keller Williams represented the buyer.
- 1013 S Euclid (1,780 SF) leased to Evolve Gym LLC. Max Fisher handled this transaction.
- 7941 E Lakeside Pkwy Suite 102 (1,000 SF) leased to Jose Roman DBA 98 Records. Max Fisher, BRD Realty handled this transaction.
- 227 E Valencia Yard 3 (8,000 SF) leased to DC roofing LLC. Max Fisher, BRD Realty handled this transaction.
- 3820 E 44th St Suite 402 (1,100 SF) leased to Robert Payne. Max Fisher, BRD Realty handled this transaction.
- 7941 E Lakeside Pkway Suite 103 (1,000 SF) leased to Richard Rivera. Max Fisher, BRD Realty handled this transaction.
- 2006 E 14th St (4,200 SF) leased to Motive Energy. Max Fisher handled this transaction.
- 2112 N Dragoon Suite 3 (1,000 SF) leased to Dent Busters LLC. Max Fisher, BRD Realty handled this transaction.
- 140 W Fort Lowell Suite 140 (2,380 SF) leased to Oasis Express LLC. Max Fisher, BRD Realty handled this transaction.
Max Fisher, Director of leasing and sales for BRD Realty, specializes in industrial and business park properties, including flex/research and development, warehouse and distribution, and manufacturing space. As a native Tucsonan, Max inherently understands what makes the community thrive. He has been active in the Tucson real estate market since 2012, and his strong community ties and industrial focus make him a standout in the commercial/industrial arena. He is known for his strong focus on relationships, tenacious work ethic, and his communication and negotiation skills. Max completed has consistently closed over 85+ transactions per year for the past 3 years. For more information, contact Max at 520.465.9989.