Posted on Jun | 2017
Office / Medical Leasing Specialist
Roughly six months ago we declared that despite the fact that we live in the Sonoran Desert, the clouds were parting and the sun was shining for the first time in about a decade. We also said the political climate is sticky and contains some dark clouds – stay tuned. As anyone who has been in the commercial real estate business for any amount of time knows, the pendulum swings up, then inevitably down again. It’s the length, breadth and timing of these swings that keeps prognosticators guessing. Tucson is still chugging toward the top of the arc, and appears to be gaining momentum. There are times when it pays to be a laggard. We may still be riding the elevator up, waiving to much of the rest of the country as they wonder to themselves, “perhaps it’s time to take a look at Tucson”.
Our most significant and reliable data resource is CoStar, and its most recent public declaration tells us that office vacancies in Tucson have decreased to 10.9 percent, down from 11.1 percent at the close of 2016 (by way of comparison, the average vacancy rate for the entire country is about one percent point lower). As always, we believe that CoStar understates the actual vacancy rate by a percentage point or two, simply because it’s nearly impossible for their data researchers to drill down far and accurately enough to hit pay dirt. Bottom line is that the trend is still our friend when it comes to vacancy numbers, and that also applies to absorption and rental rates, both heading in the right direction, especially if you are a landlord.
Through the first five months of 2017, the three largest sales (by dollar volume) are:
For the same period, the three largest leases (by size) are:
Other highlights for the first quarter of 2017 include:
Overall, it’s a pretty picture for Office finally, and getting more glamorous all the time as we seem to hear at an almost monthly rate of some new enterprise either considering Tucson or making firm plans for expansion in the Old Pueblo. It is jobs and an expanding economy that fuels the Office Market. Tucson experienced 5,300 new jobs last year and 7,100 are expected this year. Vacancy is falling, rates have firmed and are beginning to move up, and the Office Market which has suffered for many years is rebounding well.