TUCSON, AZ (December 4, 2025) — In Q3, Tucson’s retail market remained balanced amid cautious optimism, with vacancy rising slightly to 6.0% due to larger store closures. Tucson’s retail sector was defined by steady fundamentals, targeted expansion in niche segments, and cautious upward pressure on rates.

Smaller-format availabilities under 4,000 square feet (sf) were limited with vacancy at just 2.1%, underscoring few options for shop space operators. Elevated construction costs and interest rates restrained speculative development, keeping new supply muted.

Leasing activity is returning to rebound to pre-pandemic levels, with space demand centered on value, experiential, and fitness-oriented users. Discounters and resale operators were actively backfilling big-box vacancies, while health, wellness, and indoor recreation tenants expanded their footprints.

Infill and adaptive reuse projects gained traction as cost pressures discouraged large ground-up builds. Asking rents climbed 4.8% YOY, reflecting stronger momentum, though average rates still sat below national benchmarks. The affordability of Tucson’s retail space remained advantageous in attracting regional and national tenants. Supply constraints kept vacancy from climbing sharply and rent growth may accelerate if tenant demand persists.

Pricing reflected a market in equilibrium with steady rent growth and stability across most segments. Tucson’s average retail lease rates held near $20 per sf in Q3. Roughly 20% below the U.S. average, but posted annual growth of 4.8%, outpacing national trends. Affluent submarkets such as Foothills and Oro Valley commanded notable premiums due to strong household incomes and luxury retail demand.

Limited new construction and restrained supply applied modest upward pressure on rents, keeping market conditions balanced between landlords and tenants. Large-format may experience downward rate adjustments as vacancy builds, but smaller infills, fitness, and experiential users continued to lease at prevailing rents.

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TUCSON, AZ  (December 1, 2025) — With a shortened holiday work week and no reported lease transactions, Real Estate Daily News is providing a special Holiday Week Market Snapshot in place of the standard weekly lease report. While deal announcements were quiet, the underlying fundamentals in Southern Arizona’s industrial, retail, and office sectors remain active, with tenant searches, construction progress, and holiday-season activity continuing to shape the region’s commercial real estate landscape. Below is a sector-by-sector look at the trends driving the Tucson market as we begin December. All market data in this snapshot is sourced from the Trend Report December 2025 issue, “Pivot to 2026.”

INDUSTRIAL MARKET SNAPSHOT

Vacancy & Demand

• Tucson’s industrial vacancy is sitting in the 4.2%–4.5% range.
• South Airport, Northwest, and Southwest continue to show the tightest conditions.
• Tenant search activity is still strongest in the 3,000–10,000 square foot bracket.

Most of the region’s vacancy softness is tied to one major availability — the Black & Decker distribution facility — rather than broad market weakness. Requirements in the 3,000–10,000 SF range remain the dominant driver of tours.

Construction Pipeline

• Over 700,000 square feet of space remains under construction regionwide.
• Deliveries have slowed enough that vacancy is not rising.
• Developers continue to face power-capacity limits in certain submarkets.

Tenant Search Patterns  being  reported

• Small-bay flex with 14–16’ clear.
• Dock-high for 15k–40k users.
• Yard-heavy sites in the Southwest and Northwest.

RETAIL MARKET SNAPSHOT

Openings

• Retail openings remain active across Tucson, Marana, Sahuarita, and Oro Valley.
• November saw consistent grand openings.

Demand Themes

• QSR pads and drive-thrus remain the most competitive segment.
• Medical retail and boutique fitness continue steady expansion.
• Second-generation space is absorbing quickly, especially 1,200–3,000 SF bays.

Vacancy

• Shopping center vacancy is hovering near 6%, the lowest in more than a decade.

Holiday Retail Activity

• Centers saw higher traffic starting the week before Thanksgiving, reflecting stronger consumer foot traffic versus last year.

OFFICE MARKET SNAPSHOT

Stabilization Signs

• Vacancy has flattened in the 16%–17% range.
• Class A outperforming Class B and C.
• Medical office strongest, especially in Oro Valley and the Foothills.

Tenant Trends

• Most active suite sizes: 1,500–3,000 square feet.
• Rising preference for turn-key medical or move-in-ready professional spaces continues to rise.
• Downtown demand remains mixed but is not declining further.

With Thanksgiving week behind us, seasonal patterns will continue to shape commercial real estate activity across Southern Arizona. While leasing activity typically eases during the holiday season, the investment side of the market often moves in the opposite direction. Year-end deadlines, particularly for buyers completing 1031 exchanges, usually contribute to a measurable uptick in sales volume across Southern Arizona. Real Estate Daily News will continue monitoring lease announcements, retail openings, permit activity, and end-of-year sales, and will resume the standard weekly lease report as soon as new transactions are publicly released.