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Market Report

Tucson Retail Market Report

2023 Investment Forecast

Retail Spending Anchored by Staunch Healthcare Base;
Investors Leaning Toward More Risk-Averse Behavior

Health services provide backbone for retailer operations. Even as the local job market ebbs, healthcare firms are expected to bolster staff counts and support retail spending in the near term. Growth in the age 65-plus cohort is cultivating robust demand for medical services, reflected in expansions from providers like Banner Health and Marana Health Center during 2022. Boasting the lowest median home price among the Southwestern markets ranked in the NRI, and offering no tax on Social Security benefits, Tucson should remain an attractive destination for retirees and new hires at healthcare firms. Expansions in this sector should continue to support consumer spending and generate additional commitments from retailers. Current vendor competition is apparent, with the vacancy rate sitting 30 basis points under the long-term mean entering this year. Much of the retailer demand is for built-to-suit floor plans, as nearly all of the completions slated for 2023 have secured tenants. Nonetheless, expectations for a quieter overall job market this year may urge some retailers to pause move-ins, leading to a weaker net absorption volume relative to 2022 and a bump up in vacancy. 
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