PacWest Rentals, a growing provider of construction and industrial equipment rental solutions, has secured a lease for a strategically located industrial outdoor storage (IOS) site at 2110 N Dragoon Street in Tucson. This expansion marks the company’s official entry into the Tucson market and strengthens its footprint across the Southwest.

The newly leased property will serve as a hub for PacWest Rentals’ equipment fleet, supporting contractors, developers, and industrial users throughout the region. The site’s central location and functional 2.06 acre yard with office/warehouse and room to turn 53' trailers provides an ideal platform for equipment storage, maintenance, and distribution.

The Dragoon Street site offers convenient access to major transportation corridors, enabling efficient delivery and pickup across Tucson, Marana, Vail, Sahuarita and Southern Arizona.

This move reflects PacWest Rentals’ broader strategy to scale its presence in high-growth Sun Belt markets, where population growth and development activity continue to drive demand for construction and infrastructure improvements. 

Based in Gilbert, AZ, serving the greater Southwest, PacWest offers a broad selection of Caterpillar equipment; including: Articulating Trucks, Dozers, Excavators, Motor Graders, Scrapers, Wheel Loaders, Water Wagons, Rollers, Stand Tanks, and Mega Pumps.
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Max Fisher, BRD Realty represented the landlord and Kent & Kyle Hanson, Kidder Matthews represented the tenant. 

They need infrastructure—particularly three-phase 480-volt power—to operate CNC and EDM machinery. Unlike 2021, where distribution was the demand theme, clear height and loading becomes less relevant as amperage and voltage becomes more relevant. 

This has created what can best be described as a mid-stage supply crunch for high-power industrial bays. While vacancy in the broader market increased substantially over the past year, nearing the 10% mark, that figure masks a growing scarcity of usable inventory for certain tenant profiles. Spaces with sufficient amperage, modern electrical panels, and the ability to accommodate heavy equipment are being absorbed quickly.

At the same time, demand for industrial outdoor storage continues to strengthen—and in many ways, this segment remains the tightest in the entire Tucson industrial ecosystem. Supply is extremely limited, particularly for sites that offer both office/warehouse improvements and yard space. Tenants are increasingly unwilling to compromise by taking pure yard-only sites. Instead, they are prioritizing properties that combine secure outdoor storage with a functional building component for operations, maintenance, or administrative use. Oversized roll up doors, wide turning radiuses, perceived safe areas, total land mass, and access to I-10 are big bonuses and often non-negotiables from IOS tenants.

The most sought-after IOS configurations today are sites with at least one acre of usable yard with buildings located on the edge of the lot. These properties provide the flexibility that contractors, equipment operators, and material suppliers require. The demand is not speculative—it is directly tied to real and expected economic activity, particularly residential development across the region.
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Recent large-scale land acquisitions by homebuilders in areas like Marana and Vail are a key driver behind this trend. Retail then follows the rooftops…..think Tangerine and I-10. Multi-hundred-acre subdivision projects are moving forward, and with them comes a wave of contractor demand. Every subdivision requires a network of subcontractors—grading companies, utility installers, framing crews—each of whom needs space to store equipment, materials, and staging operations. Think pipe, trenching equipment, and heavy machinery. These users are not temporary in nature; they often require multi-year commitments aligned with the development timeline.

While these segments are strengthening, the distribution market tells a different story. Demand for larger bay spaces—generally those exceeding 30,000 square feet—has softened considerably. Much of the tenant pool that required these spaces over the past several years has already been satisfied. The urgency that once drove rapid leasing in this size range has dissipated, and newer demand has yet to fully backfill that gap.

As leases signed at the peak of the market begin to approach expiration—many of them structured as five-year terms—we could see an increase in vacancy within this segment. Tenants may downsize, consolidate, or in some cases exit the market altogether, particularly if their business models have adjusted post-pandemic.

Despite these risks, overall market fundamentals appear to be stabilizing—and potentially improving. The increase in vacancy last year was significant, but it now appears that we are at or near the peak. Leasing velocity has picked up, particularly in the small to mid-bay segments and IOS category. If current activity levels persist, vacancy should begin to trend downward over the coming quarters.

Another variable to watch closely is the capital markets environment. A growing number of industrial properties are approaching loan maturities tied to debt placed approximately five years ago. Those loans were often secured in a dramatically different interest rate environment. As they reset at today’s higher rates, owners may face materially increased debt service obligations.

For properties with stable occupancy and strong tenant profiles, this transition should be manageable. However, assets experiencing vacancy could face pressure. Rising operating expenses combined with higher debt costs may create situations where owners are forced to recapitalize, sell, or otherwise restructure. While this dynamic is worth monitoring, it is unlikely to result in widespread distress across the industrial sector. Tucson’s fundamentals remain relatively sound, particularly in the segments where demand is strongest and the investor landscape is much different locally compared to nationally.

In many ways, the current moment reflects a normalization of the market rather than a downturn. The surge in vacancy last year created the perception of softness, but what we are seeing now is a reallocation of demand.
Industrial outdoor storage and power-intensive manufacturing are not just niche segments—they are emerging as core drivers of Tucson’s industrial economy. As long as residential development pipelines remain active and manufacturing demand continues to expand, these trends should persist.
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The challenge for landlords and developers will be adapting to this new demand profile. That may mean investing in electrical upgrades or reconfiguring sites to accommodate yard space. Those who align their product with where demand is heading—not where it has been—will be best positioned to capitalize 

Torch Properties, owned and managed by Brandon Rodgers has purchased partial equity in 100,387 square feet of light industrial, retail and business park property totaling more than 40 tenants. 
The Properties include;

-Campbell Village, a retail shopping center located at 3025 N Campbell with tenants including; The District Bites and Brews, Chipotle, El Jefe Cat Lounge, Gelish Nail Salon, The Running Shop, Core Nutrition, Dirty dawgs Pet Care, Mauricio Fregoso Salon, and Secure Nation & Cyber.

-1010 E Palmdale, 1020 E Palmdale, 4100 S Fremont and 1021 E Palmdale, light industrial business park properties with office suites and small-medium industrial bays with roll up doors, 3 phase power, and office/warehouse layouts.

-1101 E 18th St, a single tenant industrial outdoor storage building occupied by Nutrien Ag Solutions.

After last year’s partial equity buyout of Oracle Towers, a light industrial, retail, and business park property totaling more than 50 tenants located at 3811-3889 N Oracle Road, the business park is now at 100% occupancy. Quick lease up, quality/experienced management, CAM and expenses management, in-house maintenance and tenant retention has proved to improve the financials significantly in a short amount of time.

Torch Properties and BRD Realty look forward to bringing higher occupancy and quality/experienced property management to Campbell Village, Palmdale Industrial, Fremont Industrial,  and Oracle Towers.
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Max Fisher of BRD Realty will handle the leasing, and Eileen Lewis of Torch Props will now take over the management.
For additional equity buyout/management opportunities or leasing inquiries, please contact Max Fisher at max@torchprops.com or 520-465-9989.

Basis, floating rate debt, and maturing debt are now paramount. The real estate boom of 2020-2021 was mostly attributed to record low interest rates but not all of that debt was fixed. 5 year debt is now set to mature in 2026. Floating rate debt has increased and now mostly plateaued. Those who have maturing debt are faced with difficult decisions, sell and maybe preserve some equity or refinance and expect cashflow to be hit.
Not all properties face this fork in the road if base rent has increased but an increase with debt expense and NNN expenses is a difficult intersection and lately, landlords’ solution has been rent increases which either works in specific sub-markets or leads to higher vacancy.
 
What tenants should do in 2026

• Use the new competition to negotiate TI, free rent, and flexible terms—especially in big-bay.
• If yard/IOS is critical, start early and prioritize entitlement/zoning realities.
• Understand which sub-markets and sizes have higher vacancy rates and use that to negotiate.
• Recognize that just because a sub-market has higher vacancy, that doesn’t necessarily mean a landlord is ready or in a position to negotiate.

What landlords should do in 2026

• For large-bay and class b: win deals with speed and certainty (responsive proposals, realistic TI, clean lease terms).
• Protect NOI: keep an eye on NNN expense growth and renewal strategy.
• In weaker submarkets: be proactive—rate isn’t the only lever, but it’s the fastest one.

The Tucson industrial real estate market continues to shift as vacancy trends, macroeconomic pressures from tariffs, and submarket dynamics reshape demand. Current industrial vacancy stands at 8%, up from 7.2% last year, and projections show continued upward pressure through 2026, most likely climbing above 10%. 

Vacancy Trends

Vacancy rates have risen steadily since 2023 and are expected to surpass 10% in 2026 as sublease space burns off and large bays return to the market. This is particularly evident in the 20,000 SF+ segment, where new speculative development is increasing supply.

IOS Remains the bright spot. Industrial Outdoor Storage (IOS) continues to be the strongest sector of Tucson’s industrial market. With limited supply and persistent demand from contractors, logistics groups, and service-based users, IOS assets remain competitive and command strong pricing relative to traditional warehouse space.

Geographic Strength and Weakness

The north of Prince Road and I-10 corridor remains Tucson’s strongest geographic submarket, benefiting from less crime, interstate access and stable tenant demand.

By contrast, rising crime in the Grant & I-10, Park & Ajo and Aviation areas is pushing tenants to seek alternatives in Vail, Marana, Airport and Contractor’s Way markets. These emerging areas are absorbing demand that might otherwise have located in the urban core, supporting higher stability in those submarkets.

Large-Bay Market Dynamics

Large-bay speculative development (20,000+ SF) is showing more activity than last year, but competition is putting downward pressure on lease rates for existing product. As vacancy builds, we’re seeing lease rate compression in this segment, with landlords increasingly competing on pricing on 20,000 SF + class b industrial buildings to attract tenants.

Tariff Uncertainty and Lease Terms

One of the biggest headwinds in 2025 has been tariff-related uncertainty. Fluctuating trade policy has left many occupiers hesitant to commit to long-term leases, preferring shorter 1–3 year deals until economic conditions stabilize. Renewals are increasingly short-term, and long-term build-to-suit commitments are being deferred.

This hesitancy impacts speculative construction and investor underwriting, as developers face difficulty securing tenants willing to sign longer leases and unpredictable materials costs that would typically anchor financing.

Construction Costs and Capital Markets

The good news: construction costs have plateaued after several years of rapid escalation, giving tenants and developers more predictable budgeting.

The challenge: sustained higher interest rates are stressing owners who purchased at all-time highs. With rent growth flattening and NNN expenses climbing, many of these acquisitions are underperforming initial projections. Some distress is beginning to surface, particularly among leveraged buyers in secondary submarkets.

Outlook for 2026Looking forward, Tucson’s industrial market is likely to see:

• Vacancy above 10%, driven by the return of sublease space and new speculative construction.
• Plateaus in rental rates and property values, with the potential for compression in higher-crime areas.
• Continued strength in IOS and in submarkets north of Prince/I-10, Vail, Marana, and Contractor’s Way.
• Ongoing shorter lease commitments until tariff and interest rate conditions stabilize.

The market remains fundamentally healthy and balanced, but both tenants and landlords should prepare for a more competitive environment heading into 2026.

Max Fisher, BRD Realty represented both buyer and seller. 
Fisher Peak LLC and VCC Investors were the sellers and FGH US LLC was the buyer. 

6444 S Fontana Avenue
-3.02 acres
-Zoned C2
-Utilities at the lot line
-Frontage on Valencia Road

TUCSON, AZ — In a significant industrial lease transaction, Energy Transportation Logistics has signed a lease for 34,680 square feet at 777 E MacArthur Circle in Tucson, Arizona. The deal represents one of the largest industrial leases in Tucson’s Airport submarket this quarter.

Max Fisher of BRD Realty represented the landlord, MacArthur Investments LLC, in the lease transaction. Jackson Kraft of CBRE represented the tenant.

777 E MacArthur is a highly functional dock and grade distribution facility strategically located near Tucson International Airport, providing efficient access to Interstate 10, the Union Pacific rail line, and the international border. The site is well suited for logistics operations, warehousing, and transportation services — making it an ideal fit for Energy Transportation Logistics, a growing regional carrier.

“This transaction highlights continued demand for quality industrial product with outdoor storage in Tucson,” said Max Fisher, who brokered the deal on behalf of the ownership. 

Max Fisher has consistently led the Tucson market in industrial transaction volume. As a CoStar Power Broker and one of the most active industrial agents in Southern Arizona, Fisher is recognized for his deep market knowledge and deal-making capabilities. He has represented numerous institutional and private landlords in the region and played a central role in many of Tucson’s most notable industrial transactions.

This lease further underscores the strength of Tucson’s industrial market, where vacancy rates remain below historic averages and demand from transportation, logistics, and manufacturing tenants continues to drive leasing activity.

For more information on available industrial properties in Tucson, contact Max Fisher at BRD Realty.

E-commerce and Logistics: Powering Fleet Growth

The meteoric rise of e-commerce has transformed the logistics sector and, by extension, reshaped demand in industrial real estate. One key outcome is the explosive growth of delivery fleets — trucks, trailers, last-mile vans, and support vehicles — all of which need somewhere to park when not on the road. Industrial Outdoor Storage fills this need perfectly.
Proximity to major highways, intermodal hubs, and urban centers makes IOS an ideal base of operations for fleet staging, maintenance, and dispatch. As e-commerce players and third-party logistics providers expand their footprint, IOS lots are increasingly being used as “vehicle yards” — essential extensions of warehouse operations.

Furthermore, IOS provides a flexible, scalable solution. As delivery volumes fluctuate seasonally or in response to promotions, tenants can quickly scale up or down without committing to large-scale warehouse leases. That adaptability is yet another reason IOS is becoming a cornerstone of logistics real estate strategies.

Rising Lease Rates: Fueling a Shift to Outdoor Storage

The industrial sector has seen record-breaking lease rate increases over the past several years, driven by constrained supply, high land values, and insatiable demand for logistics space. As a result, tenants who traditionally stored goods indoors are reevaluating their space requirements — especially when it comes to bulky, weather-resistant materials.
For industries like construction, energy, and infrastructure, the calculus is simple: Why pay $12–$18 per square foot to store steel, pipe, or conduit indoors when a well-managed IOS yard can handle the same load at a fraction of the cost?
This cost-conscious shift is prompting developers to rethink site configurations, incorporating more outdoor racking, heavy-duty paving, and stormwater management systems to accommodate these evolving storage needs. As a result, IOS is no longer just a “dirt lot” — it’s an engineered asset built for heavy-duty utility and long-term value.

The Crime Factor: Securing Valuable Assets

One of the less-discussed but highly impactful drivers of demand for IOS is the rise in property crime, particularly theft of valuable equipment, vehicles, and materials. As crime rates climb in various urban and suburban markets, businesses are seeking secure, fenced outdoor facilities to store high-value assets. Whether it's a construction company looking to protect backhoes and excavators or a logistics firm guarding its trailer inventory, secure IOS facilities with fencing, surveillance, and controlled access offer peace of mind — and a compelling value proposition.
The ability to lock down large-scale equipment on a secure, monitored lot has elevated IOS from a simple storage solution to a critical risk-mitigation tool. In this environment, well-located IOS facilities with security infrastructure can command premium lease rates and enjoy low vacancy.

Final Thoughts: The Rise of a Once-Overlooked Asset

What was once considered a low-rent segment of industrial real estate is now a darling of institutional investors. IOS offers a unique combination of high yield, low capex, and resilience to economic cycles. Its value proposition is being reinforced by the very trends that are reshaping the global economy: rising security concerns, booming e-commerce, and cost pressures in traditional warehousing.
For investors, developers, and tenants alike, Industrial Outdoor Storage is proving to be more than just a parking lot — it’s a strategic asset whose time has clearly come.

In 2024 we had more industrial square footage demolished and redeveloped than built and now, around 1,000,000 SF of spec industrial is slated to be completed in 2025. These projects are mostly focused on the larger bay sizes. Small bay construction costs remain high, and lease rates will have to double to justify new construction. While materials costs have dropped, labor costs continue to climb. Overall, construction costs seem to have plateaued. Now with tariff uncertainty we could see another increase in materials costs. We have already seen air conditioning units and parts increase in price and quickly become more difficult to find.
The Tucson Airport market is seeing significant growth in its industrial footprint, with expansions and new construction planned to accommodate air freight, e-commerce, and global supply chain operations. The airport’s proximity to the border also makes it a valuable asset for cross-border trade, and the airport's industrial infrastructure is poised for long-term growth.

With the airport area demand high, land is now scarce. This lack of vacant land in the airport market will push demand outward into areas like Vail. There are also a few vacant parcels that have already been purchased in the Ajo/Palo Verde market that will soon be developed but large parcels of vacant industrial land are now scarce.

The Northwest/Marana market has the highest demand from small-mid bay tenants and buyers. As lots of growth in retail/residential pushes into Marana, the most sought after area in the Southern Arizona region from retailers, consumers and industrial businesses. Lease rates in the Northwest now push North of $1.20 NNN.

The Palo Verde market has seen a quick increase in vacancies. The Palo Verde market is the largest and most dense industrial market. With some owners raising rates 20-30% within the past six months, vacancy has followed suit. We can expect lease rates to compress in the Palo Verde market now that a tenant can tour 10 buildings when just a year or two ago they may have had two options to tour.

From a demand perspective, we expect new demand in the market to mostly stem from the mining industry and housing industry. The industrial golden child, E-commerce, seems to have slowed.  Meanwhile, Sundt’s mining division just purchased the former TuSimple campus in Vail for $22,000,000. With copper prices hitting an all-time high just a month ago and battery minerals in high demand, we can expect the mining industry to continue to grow. Add on tariff policy and critical battery and green energy mineral trade wars with China and domestic minerals become more important than ever.
One unexpected demand driver is re-development. While industrial is highly sought after, retail, entertainment and multifamily values are significantly higher. We will see further re-development demand along with eminent domain demand in the southern market as the state starts to expand I-10 between Alvernon and Kino. Eminent domain of existing industrial buildings is already in process along the I-10 corridor as a new interchange will be built at Country Club and I-10.

The user market remains strong while the investor market trudges along with very low transaction volumes. We expect the user market to remain strong through 2025 as most of these buildings are less than 50,000 SF as this is the size range where vacancy is the lowest and we have yet to see user demand fall. User values are now even pushing $200 per square foot with the highest values in the less than 10,000 SF market and the warehouse with fenced yard market.

Despite fed rate cuts, the ten year remains around 4.3% which means interest rates remain higher. Despite the cost of debt remaining high, there is plenty of demand and dry powder but the gap between buyer and seller expectations has remained too far apart for the past 2.5 years. In addition, the formerly robust 1031 exchange market has almost dried up. When bonds and money markets are yielding 4-5%, it’s tough to justify the management of real estate for a 6% return. In addition to the cost of debt, banks are underwriting in a much more conservative manner.

However, higher for longer may result in increased transaction volume in 2025-2026 as 5-year loans mature and owners will have to decide between selling or refinancing. We are already seeing the beginning signs of distress and sales from maturing debts combined with increased cost in real estate taxes, insurance and CAMs.

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