TUCSON, ARIZONA -- CBRE Research has released the Q4 2017 MarketView reports on the Tucson office, retail and industrial commercial real estate sectors. With demand and market fundamentals on the upswing, the vacancy rate has dropped for office and industrial while retailers are seeing a shift to the suburbs.
Q4 2017 Office Highlights
- In the fourth quarter of 2017, net absorption reached 167,413-square-feet. This was a notable improvement from the same time last year when net absorption totaled 62,147-square-feet.
- Net absorption in Q4 2017 was bolstered by the East Central and Northwest submarkets, which accounted for 87,882-square-feet and 55,188-square-feet., respectively.
- Strong demand in Q4 2017 pushed the marketwide vacancy rate down 170 bps quarter-over-quarter to 12.6%. On a year-over-year basis, vacancy decreased by 300 bps.
- No new office product was delivered during the second quarter of 2017, while 150,000-square-feet. BTS for Caterpillar broke ground in the West Central submarket.
- For full report see Q4 2017 Tucson Marketview Office
Q4 2017 Retail Highlights
- Q4 2017 ended with 4,382-square-feet of positive net absorption, up from (50,272-square-feet) of negative net absorption recorded in the previous quarter.
- Vacancy in the Tucson retail market declined slightly by 10 basis points (bps) quarter-over-quarter to 7.2% in Q4 2017. On an annual basis, this represents a 10 bps decrease.
- Year-over-year, vacancy declined in only two of the six submarkets. Vacancy fell 260 bps in the Northeast submarket to 7.7%.
- In Q4 2017, the marketwide average asking lease rate dropped slightly quarter-over-quarter to $15.70 triple net (NNN) per square foot
- There was one new retail delivery to the Tucson market in Q4 2017, the BTS for Ross Dress for Less in the Houghton Town Center.
- One project totaling 55,000-square-feet is currently underway in the Southwest submarket. The Landing (formerly “Fashion Park”) continues construction on Phase I of the master-planned development located on Irvington Road west of I-19.
- For full report see Q4 2017 Tucson Marketview Retail
Q4 2017 Industrial Highlights
- In Q4 2017, Tucson’s marketwide vacancy rate decreased 10 bps quarter-over-quarter to 8.1%. On a year-over-year basis, vacancy fell 20 bps.
- Quarter-over-quarter, the average asking lease rose to $0.50 NNN per sq. ft. Year-over-year, average rent increased by 6.4% marketwide.
- No new space came online during the fourth quarter of 2017. Additionally, two projects are still underway. The Port of Tucson, a 238,734-square-feet rail-served warehouse, in the Southeast submarket is anticipated to deliver in early 2018. Additionally, Switchgear Solutions is building a 19,033-square-feet Class B warehouse facility in the Northwest submarket.
- For full report see Q42017 Tucson Marketview Industrial