Vacancy Inches Up as Construction Pipeline Remains Active

TUCSON, AZ (November 14, 2025) — Cushman & Wakefield | PICOR has released the Tucson Industrial Market beat. Tucson’s industrial sector remained stable through the third quarter of 2025, supported by rising incomes, steady job growth, and resilient tenant demand despite a softer national economic backdrop. Median household income grew to $74,000, up 3.2% year-over-year, while nonfarm employment reached 398,100 jobs. The unemployment rate edged up to 4.2%, but population growth—though moderating to 0.6%—continues to outpace the national rate and fuel demand for housing and services.

Vacancy and Absorption
Overall, industrial vacancy increased slightly to 6.6%, as new development continues to outpace absorption. Year-to-date net absorption stands at –413,186 square feet, reflecting slower activity in select submarkets, particularly Southeast Tucson. Despite the negative absorption, demand from logistics, e-commerce, and traditional industrial users remains healthy, especially in the Airport and Northwest submarkets.

Construction & Pipeline
A total of 906,855 square feet was under construction at the end of Q3, with the Airport area leading activity. No major projects were delivered this quarter, though several speculative buildings are scheduled through early 2026 and are expected to push vacancy higher upon completion. Key 2025 completions to date include Mueller Inc. (24,984 SF) and Avanti (20,900 SF).

Leasing Activity
The largest lease this quarter was Werner Aero (30,000 SF) at 845 E. Ohio Street, followed by Stevens Equipment Supply (24,822 SF) and Lennox Industries (11,166 SF, renewal). Activity was strongest in the Airport, Northwest, and Palo Verde submarkets, with user demand remaining steady even as clean-energy-related site searches paused.

Investment Sales
Sales volume was limited but supported by solid fundamentals. Notable transactions included two large assets traded as part of a national portfolio: 3780 E. Valencia Rd. (259,279 SF) and 6690 S. Alvernon Way (244,889 SF), both sold from Bridge Investment Group to Apollo Global Management. Other sales included assets in Downtown, Park/Ajo, and Palo Verde priced between $43–$560 PSF.

Pricing & Rents
Average asking rents held steady at $0.83 per square foot per month, unchanged from Q2 as developers balanced rising construction costs with moderated demand. Single-tenant buildings with yard space remain the most competitive, supporting stable rents across core industrial corridors.

Outlook
The market is positioned for continued stability heading into 2026, with moderate leasing demand, a cautious investment environment, and a substantial speculative construction pipeline that will shape future vacancy and rent trends.

Read the full report here.

Trademark ATLAS low-coverage development is fully leased to Frito-Lay (PepsiCo)

Gilbert, Arizona – (November 14, 2025) — Scottsdale-based ATLAS Capital Partners (ATLAS) has announced the $26.8 million sale, or $443 per-building-square-foot, of a Gilbert, Arizona industrial project. The property, which serves as a model for the company’s growing portfolio of best-in-class, low-coverage developments, closed at a 5.28% CAP, achieving the lowest CAP rate and highest price-per-square-foot this year for a Phoenix industrial building sale.

The 60,500-square-foot building sits on 8.16 acres at 3797 S. Silverado Court in Gilbert, Arizona. It fronts the Loop 202 Santan Freeway just north of Germann Road, and is minutes from Chandler Municipal Airport.

The single-tenant building is fully leased to Frito-Lay, a division of PepsiCo.

ATLAS purchased the Gilbert land site in 2022 and initiated a low-coverage development plan to accommodate the property’s unique shape. The approach quickly attracted the attention of Frito-Lay, leading to a long-term, full-building build-to-suit lease achieving a market-high rental rate.

“A colleague spotted this oddly shaped parcel during a weekend drive through Gilbert. Most developers would have passed on its odd geometry, which doesn’t align with a traditional industrial site, but we recognized the potential,” said ATLAS CEO Chris Walton. “That creativity resulted in a distinctive project the market was waiting for – even if it didn’t know it yet – and became the beta for our now regional, low-coverage strategy. In the process, it gave Frito-Lay a new industrial configuration that hadn’t existed to date.”

The ATLAS low-coverage strategy integrates institutional-grade industrial buildings with substantial outdoor yards that are secured, screened, paved and lit. This delivers the operational versatility today’s industrial users demand – from logistics giants to regional suppliers and contractors.

The Silverado Court building features a 161-foot building depth with 28-foot clear height, 15 dock-high doors, two grade-level doors and 5,000 square feet of office. It offers immediate Loop 202 access via the Gilbert Road and Lindsay Road interchanges, and is minutes from 3.5 million square feet of retail and restaurant amenities at the intersection of Gibert and Germann roads.

Cushman & Wakefield represented ATLAS in the building sale. Colliers represented the buyer, Simone Charitable Foundation.

“Land-heavy industrial developments remain undersupplied in metro Phoenix, though demand is rising sharply,” said ATLAS COO and General Counsel Dan Gauthier. “This project has been a resounding validation of our low-coverage thesis, first through a full-building pre-lease to Frito-Lay and then through a highly successful sale. We’re now scaling this product type across strategic Mountain and Sun Belt markets, beginning with our next major project, ATLAS Exchange.”

ATLAS Exchange is the company’s largest land acquisition to date, spanning 38 acres within Mesa, Arizona’s Elliot Road Tech Corridor and the Eastmark masterplanned community. The project includes four modern, high-finish buildings ranging from 40,000 to 90,000 square feet. With lot sizes up to 12 acres, each freestanding building offers generous secured, paved and lit yards. The project also includes amenity-rich additions such as ramadas and pickleball courts, with proximity to the Loop 202 and Mesa Gateway Airport, and corporate neighbors such as Meta, Apple, Google, Amazon, Boeing and more.

ATLAS Exchange offers built-to-suit options, for-sale and for-lease buildings, and land sites for sale. For more information, contact exclusive listing brokers Pat Harlan and Steve Larsen of JLL, at 602.282.6300.

Since its establishment in 2020, ATLAS has developed and acquired more than $450 million in projects, including ATLAS Exchange, the Frito-Lay development, and an approximately 119,950-square -foot warehouse facility in Goodyear, Arizona, leased to Fieldcore Services, a subsidiary of General Electric.

Financing secured for 172,244-square-foot Tailwinds at Gateway facility

PHOENIX, (Nov. 14, 2025) –  JLL Capital Markets announced today it has arranged $31 million in acquisition financing for Tailwinds at Gateway, a 172,244-square-foot Class A industrial facility located in Mesa, Arizona.

JLL represented the borrower, McCarthy Cook & Co., to secure a balance sheet loan through a money center bank.

The newly constructed facility, completed in 2023, spans 14.03 acres at 8017-8121 East Pecos Road in the Mesa Gateway submarket. The property comprises 10 buildings housing 24 tenants across unit sizes ranging from 2,286 square feet to 27,833 square feet, with an average suite size of 6,625 square feet.

Tailwinds at Gateway features best-in-class amenities, including 22-foot clear heights, 48 grade-level doors, nine dock-high doors, and 345 parking spaces. All warehouse spaces are fully air-conditioned, with secure truck courts and convenient access via East Pecos Road and South 80th Street.

The development achieved full occupancy within 24 months of construction completion. The property’s diverse tenant roster includes nationally and internationally recognized tenants spanning logistics, manufacturing, and security technology sectors.

The Southeast Valley submarket has emerged as a national leader for semiconductor, aerospace and defense, electric vehicle and solar manufacturing industries. The region’s proximity to Arizona State University, skilled labor availability and business-friendly environment have attracted diverse industrial users seeking modern, well-amenitized space.

The JLL Capital Markets team was led by Senior Director Jason Carlos, along with Analysts Nick Englhard and Lilley Kroll.

“The rapid lease-up and successful financing of Tailwinds at Gateway reflects both the strength of Phoenix’s small bay industrial fundamentals and the growing institutional appetite for stabilized, income-producing assets even with perceptions around supply-concerns in certain markets,” said Carlos. “With most small bay industrial groundbreakings effectively halted due to elevated development costs, existing Class A properties like Tailwinds are increasingly scarce and valuable.”