The stabilization of Tucson’s nonresidential real estate market in 2012 is expected to continue this year, local brokers say.
And while there may be slight gains in commercial tenants, there are no predictions of any major victories in 2013.
“There’s a lot of uncertainty in the market. There are still storm clouds out there,” Hank Amos, CEO and chairman of Tucson Realty & Trust, said during the company’s forecast meeting Thursday. “No one is saying, ‘Happy days are here again.’ ”
Still, he said, the market has stopped sliding and leveled out in 2012. It should maintain its level or improve slightly in 2013.
Among the highlights last year, retailers expressed faith in the Tucson market and took up shop in some big spaces that had sat vacant for years, said Pat Darcy, a retail specialist.
He said the vacancy rate for retail property dropped to 9.8 percent in 2012, the lowest in more than three years.
Calling Walmart the dominant force in Tucson’s retail sector, Darcy noted that there is currently more than 200,000 square feet of space under construction for the retail giant.
He predicted that nontraditional tenants, such as health clubs, charter schools and churches, will move into retail centers this year.
But Darcy also expects more independent gas stations and restaurants to close in 2013.
The vaunted recovery in the housing market last year led to major land purchases by national homebuilders, said Bob Solfisburg, a land broker.
“Homebuilders cleaned the shelf of remaining finished and platted lot inventories held by banks,” he said. “Their motivation? Control the monopoly board of existing or nearly completed lot inventories in a regional Sun Belt market that holds great promise for job growth.”
More than $65 million in residential land sales were recorded last year, Solfisburg said. But he noted that with 40 percent of residential loans underwater in Arizona, tighter credit rules could impede the housing recovery.
In the industrial market, hesitation about possible cuts in defense spending has companies reluctant to expand, said Chuck Blacher, an industrial broker.
“Job growth is critical to reducing the vacancy rate, for the industrial recovery to pick up steam here in Tucson,” he said.
Until that happens, Blacher said, there likely won’t be any speculative building by investors in 2013.
On the positive side, he said: “Tucson is the only Southwest city with 11 vacant industrial buildings 100,000 square feet or larger that could accommodate a company looking to relocate (and) not having to wait for new construction.”
Overall, the brokers seemed cautiously hopeful about the market in 2013.
They all echoed Blacher’s sentiment that the only thing that will put Tucson on an economic upswing is new jobs and the migration of workers to fill them.
“Until more people start moving here,” Amos said, “Tucson is going to be in the muddle-through.”