Tucson Retail Market Report

Demand trends vary by tenancy type. Household income growth ranking in the top quartile of major markets in 2025, coupled with the relative affordability of space, bodes well for Tucson’s retail market ahead. Several headwinds are apparent, however. Employment growth remains among the weakest in the nation, while the metro also enters 2026 with one of the highest vacancy rates among major markets. Nonetheless, upward vacancy pressure appears unlikely in the coming year, as the incoming delivery slate is nearly fully pre-leased as of early 2026, while net absorption rebounded in the second half of last year. This was in part driven by improving demand for sub-10,000-square-foot single-tenant spaces, which had previously faced a wave of relinquishments. Meanwhile, despite increased backfilling from entertainment and fitness concepts and discount retailers, weaker leasing activity among other conventional big-box retailers in late 2025 points to continued pressure on larger multi-tenant space in the coming year.