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Market Report

Tucson Retail Market Report

4Q 2023

Retailers’ Space Demand in Tucson Emulates
Much Larger Consumer Markets

Tucson notes highest net absorption among smaller metros. Tucson’s prospects for household gains are motivating an accelerated pace of retailer expansions. Vendors absorbed 271,000 square feet on net over the first half of 2023, the largest figure among any major U.S. metro with less than 75 million square feet of stock. Moving forward, the local household count is on track to jump 5.2 percent over the next three years, which will be the third strongest among major metros with fewer than 800,000 in total. The continued retail space demand this supports is likely to speed up vacancy contraction, as a mere 40,000 square feet was underway across the metro as of October. Competition among tenants seeking newer builds for expansions will position Tucson’s retail properties for rent growth, with the sector expected to record gains in the near-term that exceed the trailing half-decade average of 1.5 percent.
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