CBRE Research for Q1 2014 is reporting lack-luster 2013 holiday sales resulted in a sluggish start to the Tucson retail property absorption. The first quarter had a decrease in vacancy from 8.7% to 8.5%. Activity in the first quarter increased slightly among smaller retail users with no new big box leases completed. Even so, Tucson is improving gradually. The net absorption fo Q1 2014 was a positive 34,720 square-feet compared to the previous quarter reporting negative 52,210 square-feet.
New incoming tenants looking in prime areas are often unable to find choice space due to the demand in core retail areas. As supply tightens n these prime areas, rents are being pushed beyond pre-recession rates. Conversely, in the peripheral and less desirable areas, rental rates continue to see decompression.
The Tucson retail market has been slow bouncing back after the recession, but is improving nonetheless. Unemployment in the Tucson region was reported at 6.9% in January 2014, lower than the state average of 7.5%. As more jobs are added to the Tucson and overall Arizona economy, consumer confidence will improve which will, in turn, help retail sales.
Tucson ’s retail product had 219,383 square-feet under construction in Q1 2014. The Northwest corridor has gained build-to-suit construction traction from the end of 2013 to the start of 2014 with 51,503-square-feet under construction in Marana Market Place at 3850 W Orange Grove Rd for Conn’s Appliance taking 40,091 square-feet and Guitar Center taking the remaining11,412-square-feet. The villas at San Dorado at 10706 N Oracle Rd, also in the Northwest, has 6,880 square-feet under construction. This wil be home to Mattress Firm, Panera Bread and CVS Pharmacy and is expected to be delivered in late 2014. The additional 101,000 square-feet is situated in the Southeast region at Old Vail Plaza that broke ground in Q1 2014.
RETAIL MARKET STATISTICS
|Submarket||GrossRentableArea (SF)||VacancyRate||AvailableRate||Q1 2014 Net Absorption(SF)||Absorption(SF)||Construction(SF)||Average Asking Lease Rates NNN (PSF)|
|Total / Averages||21,908,885||8.5%||9.8%||34,720||34,720||219,383||$16.38|
- Lease rates are quoted as weighted average of all NNN lease asking prices per square-foot per year. (Source: CBRE Research, Q1 2014)
To read the full Q1 2014 Retail Market Report go to: CBRE Q1 2014 Tucson Retail Report