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BRD Realty is pleased to announce a new industrial outdoor storage (IOS) property for lease in Tucson, Arizona at 2660 W Zinnia Avenue, Tucson, AZ 85705. Located in Northwest Tucson, the property combines a 5,500-square-foot industrial building with a 1.14-acre fenced industrial site, providing a hard-to-find combination of functional warehouse space, outdoor storage, heavy power and yard area. The property is currently offered for lease at $9,500 per month NNN. Demand for functional industrial properties with outdoor storage in Tucson continues to be driven by contractors, equipment companies, service businesses, construction-related users and other companies that need significantly more land than a conventional industrial suite provides. 2660 W Zinnia is particularly well positioned for these types of users because the property combines a relatively small industrial building with a much larger fenced site. Property features include:
Heavy Power and 3-Ton Bridge Crane, another major differentiator is the existing industrial infrastructure. The building includes heavy 3-phase power and a 3-ton bridge crane, features that can be difficult and expensive for an industrial tenant to recreate at another property. For manufacturing, fabrication, equipment, service and other industrial users, existing power capacity and material-handling infrastructure can substantially narrow the number of viable buildings available in the Tucson market. The warehouse also provides 15'–20' clear height, three oversized grade-level doors and a dock-high loading door, allowing the building to accommodate a variety of industrial operations. Many conventional industrial buildings maximize building coverage, leaving tenants with limited exterior storage or vehicle staging. IOS-oriented properties such as 2660 W Zinnia offer a different building-to-land ratio that can be particularly useful for contractors and equipment-intensive businesses. The property's combination of warehouse space, office, fenced yard, loading and power could make it worth considering for a variety of industrial businesses, subject to confirmation of zoning and permitted use. Potential users may include:
Unlike a traditional warehouse requirement, an IOS user often places as much importance on the yard, fencing, access, circulation and outdoor storage capacity as it does on the building itself. Market: Northwest Tucson Jurisdiction: Pima County Building Size: 5,500 SF Site Size: 1.14 Acres Lease Rate: $9,500/Month NNN Loading: Three 16' x 20' grade-level doors + one 12' x 10' dock-high door Clear Height: 15'–20' Power: Heavy 3-phase power Crane: 3-ton bridge crane Yard: Fenced industrial site Availability: For Lease Looking for Industrial Outdoor Storage in Tucson? I specialize in Tucson industrial real estate, including industrial outdoor storage properties, contractor yards, warehouses with fenced yards, manufacturing facilities, distribution buildings and industrial land throughout the Tucson metropolitan area. If your company is searching for industrial property for lease in Tucson, particularly a property requiring a combination of warehouse space and outdoor storage, contact me regarding 2660 W Zinnia Avenue or other available properties in the market. Max Fisher | Industrial Properties BRD Realty 
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Kinder Morgan’s Western Gateway Pipeline Could Bring Major Economic Activity to Southern Arizona8/19/2026  Southern Arizona could be positioned for a significant wave of infrastructure-related economic activity as the Western Gateway Pipeline moves from the planning stages toward construction. On August 11, 2026, Phillips 66, Kinder Morgan and HF Sinclair announced a final investment decision to move forward with the approximately $5 billion Western Gateway Pipeline project, a massive refined-products pipeline system designed to create a new fuel supply route connecting the Midwest and Gulf Coast with Arizona and California. For Tucson and Southern Arizona, the significance goes beyond energy infrastructure. The pipeline is expected to pass through Pima County, potentially bringing construction contractors, equipment, employees and support businesses into the Tucson industrial real estate market during the multi-year development and construction period. And we are already seeing the beginning of it. What Is the Western Gateway Pipeline? The Western Gateway Pipeline is planned as an approximately 1,300-mile refined-products pipeline system capable of transporting gasoline, diesel and jet fuel into western markets. The project includes approximately 900 miles of new pipeline construction between Borger, Texas and Phoenix, Arizona. The system will connect with existing Kinder Morgan infrastructure and ultimately provide additional fuel supply to Arizona and California. The new system is designed for approximately 230,000 barrels per day of capacity, according to the companies' August 2026 announcement. Rather than constructing an entirely new network across the West, portions of the project will utilize or reverse existing pipeline infrastructure. Kinder Morgan's existing SFPP pipeline between Phoenix and Colton, California will ultimately become part of the system. Construction and implementation are currently targeted for completion in 2029. Earlier proposed routes showed the new pipeline traveling through Pima County and the Tucson area on its way west from Texas toward Phoenix. The project developers have also indicated that, beginning around El Paso, portions of the pipeline are intended to be co-located with existing pipeline rights-of-way to minimize the project's physical footprint. That potentially puts Southern Arizona directly in the path of one of the largest energy infrastructure projects undertaken in the Southwest in recent years. For Tucson, that matters. Large pipeline projects require considerably more than pipe and heavy equipment. They require staging areas, contractor yards, equipment storage, temporary offices, warehousing, trucking, fuel, maintenance operations, fabrication, lodging and a broad network of subcontractors and service providers. Construction Jobs and Contractor Activity in Southern Arizona. An official Southern Arizona-specific construction employment estimate does not appear to have been publicly released yet. However, the scale of the Western Gateway project is substantial: approximately $5 billion of total project value and roughly 900 miles of new-build pipeline, stretching from the Texas Panhandle through New Mexico and Arizona. Projects of this magnitude require workers across numerous trades, including:
In the Tucson industrial real estate market, I am already seeing contractors beginning to poke around for space, particularly properties capable of accommodating equipment, vehicles and outdoor storage. That activity is still early, but it is something worth watching closely as the Western Gateway Pipeline moves into execution. One of the most interesting potential impacts could be increased demand for industrial outdoor storage (IOS) properties in Tucson and Pima County. Pipeline and infrastructure contractors frequently need properties that traditional warehouses cannot accommodate. Typical requirements may include a combination of: Warehouse + fenced yard + heavy equipment storage + highway access. Those requirements overlap almost perfectly with one of the tightest segments of Tucson's industrial market. Industrial properties with one acre or more of usable yard, secure fencing, industrial zoning and convenient access to Interstate 10 could become particularly attractive to contractors associated with the Western Gateway project. Users may also need short- and medium-term leases rather than traditional long-term industrial leases, creating opportunities for owners of specialized contractor yards and industrial outdoor storage properties. Economic Impact Beyond Construction Jobs. The economic impact of the Western Gateway Pipeline on Southern Arizona could extend considerably beyond direct construction employment. Contractors working in the region will purchase fuel, equipment, materials, food, lodging and services locally. Heavy-equipment rental companies, trucking companies, repair shops, industrial suppliers and construction-related businesses could all see additional activity. The Tucson industrial market could benefit through demand for: warehouse space, contractor yards, equipment storage, truck parking, temporary offices and industrial outdoor storage. There is also a broader economic argument for Arizona. The Western Gateway project is designed to diversify Arizona's fuel supply by connecting the state more directly with refining capacity in the Midwest and Gulf Coast. Project developers say the system could supply roughly 200,000 barrels per day of Midcontinent refined products directly into Arizona, helping reduce Arizona's dependence on fuel arriving from California. Arizona's rapid population and economic growth has increased fuel demand while the state's existing pipeline infrastructure has relatively limited excess capacity. Additional supply diversity could help reduce the economic impact of refinery disruptions, pipeline outages and other fuel-supply constraints. For a growing state heavily dependent on trucking, construction, tourism and logistics, improved fuel reliability has implications far beyond prices at the pump. The fact that contractors are already beginning to investigate Tucson locations suggests that some of that activity may be starting earlier than many property owners realize.  Available Tucson Industrial Outdoor Storage & Contractor Yard Properties As activity surrounding the Western Gateway Pipeline begins to increase, contractors coming into the Tucson market will need places to stage equipment, store trucks and materials, operate field offices and warehouse supplies. That happens to coincide with several new industrial outdoor storage (IOS) and contractor yard properties I recently brought to market in Tucson. These properties offer the combination of fenced yard space, warehouse/shop space and industrial access that pipeline, utility, infrastructure and heavy construction contractors typically look for. 2925 E Ganley Road – 4.19-Acre Industrial Outdoor Storage Site located near Tucson International Airport, I-10 and I-19, 2925 E Ganley Road is one of the larger IOS opportunities currently available in the Tucson market. The 4.19-acre site is approved for industrial outdoor storage and includes 8,600 SF of improvements, consisting of approximately 5,300 SF of warehouse and 3,300 SF of office, plus a 2,000 SF canopy. The property also features 14-foot roll-up doors, heavy power and both air-conditioned and evaporative-cooled warehouse areas. The property is zoned I-1 City of Tucson Light Industrial. With more than four acres, this property could be particularly well suited for a large construction contractor, pipeline contractor, equipment company or infrastructure-related user requiring significant outdoor storage and equipment staging space. Asking Lease Rate: $14,000 NNN per month. 3200 W Diamond Street – I-10 Contractor Yard for companies that prioritize freeway access, 3200 W Diamond Street offers a rare contractor yard opportunity immediately accessible to I-10 in Northwest Tucson. The approximately 0.98-acre property features a large concrete-paved yard and two 2,960 SF shop buildings totaling approximately 5,920 SF. The property has City of Tucson I-1 zoning, permits outdoor storage, includes grade-level roll-up doors and provides quick truck access to I-10. It is also located adjacent to United Rentals and Big Tex Trailers. The combination of a paved yard, shop space and immediate interstate access makes this a strong option for construction companies, fleet operators, equipment businesses and contractors needing a Tucson staging location. Asking Lease Rate: $12,000 NNN per month. 2660 W Zinnia Avenue – Warehouse, Heavy Power & Fenced Yard another recently listed opportunity is 2660 W Zinnia Avenue in Northwest Tucson. The property consists of a 5,500 SF industrial building situated on a 1.14-acre fenced site. The building includes three large 16' x 20' grade-level doors, a dock-high door, 15'–20' clear height, heavy three-phase power and a three-ton bridge crane. The combination of warehouse space, fenced outdoor storage, heavy power and crane capacity makes Zinnia particularly interesting for contractors or industrial users that need more than just a storage yard. Asking Lease Rate: $9,500 NNN per month. I specialize in Tucson industrial real estate and industrial outdoor storage properties and represent additional properties throughout the Tucson and Southern Arizona market. If your company is coming to Tucson for the Western Gateway Pipeline or another construction, utility or infrastructure project, I can help identify warehouse space, fenced yards, equipment storage and temporary or long-term operating locations throughout the market. Max Fisher | Industrial Properties 520-465-9989 [email protected] IndustrialTucson.com
Located at 8920–8930 S. Eisenhower Road in Tucson's highly sought-after Airport industrial submarket, this 1.15-acre heavy industrial property is now available for sale or lease. The property combines functional warehouse space, office space, and a large secured yard in one of Southern Arizona's strongest logistics corridors. Property Highlights
The surrounding area is home to many of Arizona's largest employers and logistics users, including:
Ideal for Industrial Outdoor Storage (IOS)Industrial Outdoor Storage continues to be one of the most sought-after asset types across Arizona. Properties offering secure yards, functional warehouse improvements, and heavy industrial zoning remain in limited supply. This property is well suited for:
Built for Heavy Industrial UsersUnlike many small industrial properties, this facility was designed to accommodate larger equipment and commercial vehicles. The high-clear steel building, grade-level access, truck scale, and spacious yard create an efficient layout for businesses that require both indoor workspace and outdoor operational flexibility. Whether you're expanding an existing operation or looking to establish a new Tucson location, this property offers functionality that is increasingly difficult to find in today's industrial market. Why the Tucson Airport Market?The Airport submarket continues to attract investment due to its transportation infrastructure, access to Interstate highways, international trade routes, and concentration of aerospace, manufacturing, logistics, and defense employers. Demand remains particularly strong for properties combining warehouse space with secured outdoor storage, making opportunities like this increasingly scarce. Schedule a TourIf you're searching for industrial property for sale in Tucson, warehouse with yard, industrial outdoor storage, or heavy industrial real estate near Tucson International Airport, this property deserves a closer look. For pricing, lease information, or to schedule a private tour, contact: Max Fisher Industrial Properties 520-465-9989 [email protected] For additional Tucson industrial listings, market updates, and commercial real estate resources, visit IndustrialTucson.com. The Tucson industrial market has turned a corner this summer, and the data on the ground backs it up. After a stretch where vacancy climbed and speculative product sat longer than landlords wanted, we're now seeing less vacancy. Vacancy has come down somewhere between half a percent and a full percent over the past couple of quarters, and every category of the market is telling a version of the same story: demand is catching up to supply, not at a rapid pace, but it is catching up.  Spec space is finally leasing up The class A speculative buildings that delivered over the past 18-24 months were a slow burn, but that's changing. Absorption in the big-bay spec product has picked up. This is the healthiest sign in the market right now it means the supply that came online during the 2024-2025 development wave is finally being absorbed rather than stacking up as shadow vacancy. IOS demand remains the strongest segment in the market, full stop I've said it before and I'll keep saying it: industrial outdoor storage is the tightest product type in Tucson. Contractors who need outdoor storage to store fleets, equipment and materials and the biggest demand driver, followed by ancillary mining companies and automotive related businesses. Warehouses with oversized doors, at least an acre, and close to I-10 are the most sought after properties with industrial outdoor storage. Sale listings are scarce and it's pushing prices higher If you're an owner sitting on a well-located industrial building right now, you have leverage. Inventory for sale is thin across almost every size range, and the buyers who are active local operators, local investors and funds are competing for a shrinking pool of listings. Even bigger buildings like the Copenhagen building in Butterfield, Flint 400,000 SF+ building at Tangerine & I-10, and former Sam Levitz building on 36th St have sold to users in the flooring, defense and steel industry recently. That imbalance is doing what imbalances do: pushing pricing higher even as the broader capital markets environment stays cautious. Max Fisher specializes in the leasing and sale of industrial and business park properties, including flex/research and development, warehouse and distribution, and manufacturing space. As a native Tucsonan, Max inherently understands what makes the community thrive. He has been active in the Tucson real estate market since 2012, and his strong community ties and industrial focus make him a standout in the commercial/industrial arena.   BRD Realty is pleased to announce the sale of 3200 W Diamond St, a 5,920-square-foot contractor yard property in Tucson's Northwest submarket, for $1,450,000. The property sold from Escalante Concrete to IOS Southwest. Max Fisher, Industrial Properties specialist with BRD Realty handled the transaction. The .98-acre property features twin 2,960-square-foot shop buildings built in 1999, each with 14-foot clear heights and grade-level roll-up doors, along with a large concrete-paved yard zoned I-1 by the City of Tucson that permits outdoor storage. Located near Ruthrauff Road and Interstate 10, the site offers quick truck access to the freeway and sits adjacent to United Rentals and Big Tex Trailers, a rare industrial offering in a tightly held Northwest Tucson submarket. Max Fisher, BRD Realty is now marketing the property for lease (brochure below). About the Property 3200 W Diamond St, Tucson, AZ 85743 - 5,920 SF across twin shop buildings (built 1999) - .98 acres, I-1 zoning, outdoor storage permitted - 14' clear height, grade-level roll-up doors - Located at Ruthrauff & I-10 BRD Realty specializes in industrial, warehouse, flex/R&D, and manufacturing real estate across Tucson and Southern Arizona. Max Fisher, Industrial Properties BRD Realty 520-465-9989 | [email protected] | industrialtucson.com 
 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. Max Fisher, BRD Realty represented the landlord and Kent & Kyle Hanson, Kidder Matthews represented the tenant. The Tucson industrial market is entering a transitional phase—one that feels materially different from the post-pandemic surge yet not a slowdown. Over the past two months, activity on the ground has picked up meaningfully, but the composition of demand has shifted. Instead of large distribution users driving absorption, we are seeing a decisive move toward industrial outdoor storage (IOS) and power-intensive manufacturing users. These shifts are reshaping both leasing dynamics and investor expectations across Southern Arizona.
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. 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. 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. 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 [email protected] or 520-465-9989. The biggest story heading into 2026 is supply catching up to demand—especially in larger-bay product—while IOS (Industrial Outdoor Storage) and well-located, functional buildings continue to outperform. This tends to be the trend nation wide as well. Depending on the dataset and how sublease/asset classes are tracked, Tucson vacancy is best described today as a mid–single digit to high–single digit market that is trending upward as new speculative projects deliver in early 2026. We are quoting vacancy around 7.5% including finished speculative development. Tucson’s vacancy trend has shifted from “tight and landlord-friendly” to “normalizing or even declining in some markets.” Larger bay buildings are where the bulk of vacancy is starting to accumulate mostly with large vacancies in the Northwest and Southeast markets. Oddly enough, both the Southeast and Northwest small-medium bay and IOS markets are the markets with the highest lease rates and values and the lowest vacancy rates. The airport market continues to be the strongest sub-market for bigger bays mostly due to the proximity to I-10, I-19 and the airport.
2026 outlook for 5,000-30,000 SF+: We can expect mixed trends throughout the market as this size range becomes more dependent on location, functionality, and access to IOS. In general, we can expect lease rates to decline, especially in the most dense markets like Palo Verde and Park/Ajo. Lease rates in the Southeast, Airport and Northwest markets will most likely plateau. In 2025, class b-c landlords with lower basis started competing with lease rates, abated rent and TI allowances. Public safety is also a major factor in this submarket and then becomes very hyperlocal. 2026 outlook for 1,000-5,000 SF: We can expect lease rates to trend similarly to the 5,000-30,000 SF range. These bays become extremely hyperlocal dependent. While little construction has occurred in this segment of the market, lease rates have increased steadily since 2019 but vacancy is increasing overall from 1% just a few years ago. This is also the segment of the market where nnn expense differences really start to gap and impact tenants moving out.
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
 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:
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AuthorMax Fisher, Industrial Properties Broker Archives
August 2026
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