TUCSON, AZ (November 11, 2025) -- Cushman & Wakefield | PICOR is reporting the Tucson Office Marketbeat. Tucson metro non-farm employment stood at approximately 398,100 jobs. Unemployment rose slightly to 4.2%. The median household income increased to approximately $74,000, up roughly 3.2 percent year-over-year, supporting local demand. Population growth was modest (around 0.6 percent year-over-year), but still above the U.S. average, which helped bolster housing and services. Overall, the economy is described as stable with supportive fundamentals despite national headwinds, including high interest rates and inflation.
Supply & Demand (Office Market)
The overall office vacancy rate was 10.2 percent at the end of Q3. Year-to-date net absorption was negative 17,628 square feet, indicating a slight contraction in occupied space. Large lease transactions were driven by the healthcare sector, including Tucson Medical Center’s leases totaling more than 100,000 square feet on Wilmot Road. Submarket performance varied: the Foothills and Northwest suburbs performed strongly with low vacancy, while downtown Tucson showed moderate leasing activity, and the East and West submarkets experienced higher vacancies. Speculative office construction remains limited due to high costs and existing space availability.
Pricing & Sales Activity
Average asking rent for all office classes was $24.28 per square foot overall, with Class A office space averaging around $25.15 per square foot. Sales activity remained light, as investors remained cautious amid high construction and financing costs. A notable sale was 55,244 square feet at 5320 N. La Cholla Blvd. in the North/Oro Valley submarket for approximately $7.4 million ($134.56 per square foot). Investor focus remains on value-add or repositioning opportunities rather than new construction.
Submarket Highlights
- Central Tucson: 10.8% vacancy, $24.15 psf average asking rent, Class A at $26.94 psf.
- East Tucson: 16.1% vacancy, $20.30 psf asking rent.
- Foothills: 4.3% vacancy, $30.79 psf asking rent (highest among submarkets).
- North/Oro Valley: 7.9% vacancy, $21.63 psf average, Class A $25.36 psf.
- West Tucson: 23.2% vacancy, $19.24 psf asking rent.
Outlook & Implications
Tucson’s office market remains stable but soft, with modest leasing momentum and slightly negative absorption. Healthcare continues to anchor office demand in the region. Future upside is limited until interest rates decline, which could reinvigorate investor activity and new construction. Adaptive reuse is an emerging trend, as older office buildings—especially those used as call centers—are being repurposed for industrial or mixed-use applications.
Key Statistics (Q3 2025)
- Vacancy: 10.2%
- Asking rent (all classes): $24.28 per square foot
- Year-to-date net absorption: -17,628 square feet
- Largest lease: ~77,971 square feet (Tucson Medical Center)
- Notable sale: 55,244 square feet at $134.56 psf (North/Oro Valley)
Read the full report here.