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.
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