Commercial real estate in Tucson slowly improving
by Gerald M. Gay Arizona Daily Star
Tucson’s slow struggle out of the muck and mire of the recession continued to plague the nonresidential real estate market in 2014, local brokers say.
The city improved slightly on most fronts, particularly in the retail sector where the current vacancy rate is 7.8 percent, down from 8 percent in 2013, but growth is expected to remain sluggish in 2015.
Hank Amos, CEO and chairman of Tucson Realty & Trust Co., said during the company’s forecast meeting Thursday that a distinct pattern has emerged over the last five years.
“The year starts off strong,” he said. “Companies and individuals have plans to grow. Momentum builds and then we get to the end of April or May and the economy doesn’t come through.”
Retail remained the strongest market in the commercial realm, adding 410,000 square feet of positive net absorption, which relates to more space being leased than vacated, in 2014.
Retail specialist Pat Darcy attributed the growth to the redevelopment of central area properties such as Wilmot Plaza, at North Wilmot Road and East Broadway, and the development of long vacant parcels like the Chapman Automotive Group expansion at East 22nd Street and South Columbus Boulevard.
He singled out downtown as one of Tucson’s strengths, with more than 60 restaurants, 53 retail stores, two minigrocers and 18 nightclubs already in place, and new ventures, including the Johnny Gibson Downtown Market and the Proper Meatery, moving in.
Several national chains such as Natural Grocers, Cheddar’s Casual Café and LongHorn Steakhouse entered the Tucson market in 2014 and early 2015. Darcy said to expect to see more of the same throughout the new year.
New additions will include Kneaders Bakery & Café, Raising Cane’s Chicken Fingers, several Haggen Food & Pharmacy grocery stores and Blake’s Lotaburger, a fast-food chain out of Albuquerque.
Another major development will be the Tucson Premium Outlets, Darcy said; the 360,000-square-foot outlet mall is expected to be open at West Twin Peaks Road and Interstate 10 by October.
The office market saw a small increase in activity, thanks primarily to the growing number of medical and medical-related companies, said specialist Doug Richardson.
Three of the six largest office building sales in 2014 involved medical companies.
Richardson cited the Affordable Care Act and an aging population as the primary reasons behind the increase.
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