PICOR: Healthcare Leasing Lifts Tucson Office Market in Q4 2025 Report

TUCSON, Ariz. (January 29, 2026) — Tucson’s office market posted a modest late-year improvement in the fourth quarter of 2025, with vacancy edging down as absorption improved from earlier quarters, according to Cushman & Wakefield | PICOR’s Tucson Office MarketBeat Q4 2025. Even with that progress, vacancy remains above what most brokers would consider a fully balanced environment. Marketwide vacancy ended the quarter at 9.5%, with 157,354 square feet of year-to-date net absorption and an overall average asking rent of $24.25 per square foot.

Healthcare users continued to anchor demand, accounting for the majority of leasing activity as medical groups pursue long-term occupancy needs backed by strong balance sheets. The quarter’s standout transaction was ACP’s 20,928-square-foot lease at 4801 E. Broadway Boulevard.

Performance varied by submarket. The Foothills continued to outperform due to limited available inventory and sustained demand, while East Tucson recorded higher-than-normal absorption. Downtown activity remained mixed, constrained by parking challenges and older building stock. On the development front, new office construction remained limited as costs and rental levels continue to make speculative projects difficult to pencil out, leaving most new activity concentrated in medical office space.

Lease rates were largely unchanged in the quarter, though the Foothills saw slight upward pressure as availability tightened. Typical lease terms ranged from 3 to 5 years, and landlords used property-specific incentives to facilitate transactions. Tenant demand continued to favor smaller, well-located suites in newer or well-maintained buildings.

Office investment sales remained muted amid economic uncertainty and bid-ask gaps, with most activity driven by owner-users rather than institutional buyers. The most notable transaction was the sale of 1401 S. Pantano Road, a 47,531-square-foot office property, for $3.8 million to Airtronics.

Source: Cushman & Wakefield | PICOR, Tucson Office MarketBeat (Office), Q4 2025.