Everyone I come in contact with tells me the Tucson market is improving very slowly. So, I decided to do some research. I’ve learned feelings are real but they don’t agree with the facts, at least not this time.
One trend is office vacancy. We have fewer SF occupied today than we did in January 2015. Actually 6,351 SF less according to CoStar. “That compares to positive 121,546 square feet in the fourth quarter 2014. Vacant sublease space decreased in the quarter, ending the quarter at 87,397 square feet.
Rental rates ended the first quarter at $18.57, an increase over the previous quarter.
A total of three buildings delivered to the market in the quarter totaling 37,179 square feet, with 30,711 square feet still under construction at the end of the quarter. “
On a positive note: “HomeGoods, Inc,, a subsidiary of The TJX Companies, Inc., purchased 108 acres at the northwest corner of Alvernon Way and Corona Rd. in Tucson, AZ for its proposed 800,000-square-foot distribution facility.
Five transactions totaling approximately $9.53 million took place to assemble this development site for the retailer.
On the other hand Tucson Industrial Market is improving.
The vacancy rate was down over the previous quarter, with net absorption totaling positive 270,292 square feet in the first quarter. That compares to positive 127,916 square feet in the fourth quarter 2014. Vacant sublease space decreased in the quarter, ending the quarter at 101,594 square feet.The Tucson Industrial market ended the first quarter 2015 with a vacancy rate of 10.1%. Again according to CoStar.
Tenants moving into large blocks of space in 2015 include: Cactus Portable Storage LLC moving into 45,908 square feet at 6161 S Palo Verde Rd, Arizona Optical Systems moving into 31,042 square feet at 5575 S. Houghton Rd, and Vista Inkjets, Inc. moving into 29,800 square feet at 4551 S Alvernon Way.
Rental rates ended the first quarter at $6.50, an increase over the previous quarter.
There was 270,000 square feet still under construction at the end of the quarter.
This trend is compared to the U.S. National Industrial vacancy rate, which decreased to 7.0% from the previous quarter, with net absorption positive 49.59 million square feet in the first quarter. Average rental rates increased to $5.63, and 284 industrial buildings delivered this quarter totaling almost 37.5 million square feet.
It’s a mixed bag. Some days it feels like we’re on the way to a recovery. Other days it feels like more of the same or MOTS as I always say. Just MOTS!