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Market Report

Tucson Retail Market Report

2024 Investment Forecast

Searing Rent Growth Positions Tucson’s Retail Sector
To Shine Among Southwestern Investors

Thin availability sparks nation-leading asking rent gain. Tucson closed out 2023 posting the largest drop in vacancy among major U.S. markets. Although the descent should slow this year, vacancy will dip below 6.0 percent for the first time since 2007. This historical tightness will preserve a pace of asking rent growth that ranks as the highest in the nation during 2024. Newer, available builds are becoming scarce, bolstering rent momentum for these types of properties. Vacancy among supply built in the last decade fell by more than 400 basis points last year, to a near record-low 1.8 percent. However, this dynamic will exert an even greater impact on the metro’s average asking rent by steering a higher proportion of retailers to older-built stock, driving up marketed rates for lower-cost properties at an even faster pace. Scant multi-tenant deliveries helped lift the sector’s mean asking rent by almost 9 percent in 2023, exemplifying this trend. Similar levels of growth should be preserved in 2024 as less than 50,000 square feet of shopping center space sat in the construction pipeline as of January.
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