 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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 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.  Max Fisher Wins 2024 CoStar Power Broker Award for Industrial Lease Transactions in Tucson Tucson, AZ – June 11, 2025 — Max Fisher has been recognized with the prestigious 2024 CoStar Power Broker Award for his exceptional performance and volume in industrial lease transactions throughout the Tucson market. This recognition places Fisher among the top commercial real estate professionals in the region, honoring his achievements in delivering high-impact results for clients in the industrial sector. Presented annually by CoStar Group, the leading provider of commercial real estate information and analytics, the Power Broker Awards honor industry leaders who closed the highest transaction volumes in their markets. Fisher’s expertise, market insight, and consistent execution in complex lease negotiations have earned him a standout reputation among investors, landlords, and occupiers in Southern Arizona. As industrial demand continues to rise due to trends like e-commerce expansion, logistics investment, and supply chain diversification, Fisher has played a key role in helping companies secure outdoor storage yards, distribution centers, warehousing and flex-industrial spaces across the Tucson metro area. This marks Fisher’s latest milestone in a growing list of professional accomplishments, underscoring his position as a market leader in industrial real estate strategy and execution. About CoStar Group CoStar Group (NASDAQ: CSGP) is the leading provider of commercial real estate information, analytics, and online marketplaces. Each year, the CoStar Power Broker Awards recognize the top-performing brokers and firms in over 90 markets across the U.S., based on transaction volume and industry impact.  In the ever-evolving landscape of commercial real estate, few asset classes have experienced as sharp a rise in demand and valuation as Industrial Outdoor Storage (IOS). Once considered a secondary or niche segment, IOS is now rapidly maturing into a sought-after investment category — drawing interest from institutional capital, logistics providers, and construction firms alike. This growth is driven by a confluence of macroeconomic and microeconomic trends including rising crime, the expansion of e-commerce, increased construction and escalating indoor warehousing lease rates.  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.
As we enter 2025, the Tucson industrial real estate market is showing mixed signals. Could vacancy hit 10% in 2026? 10% vacancy is a very real possibility. Today, Tucson’s industrial vacancy can be described as balanced overall, with rates hovering around 6–7%—a recent uptick. However, most of this vacancy is concentrated in larger spaces over 30,000 square feet, though small to mid-size bays are also seeing a rise in availability. That said, the citywide vacancy rate only tells part of the story. In some areas—particularly north of Grant Road and I-10—vacancy remains extremely tight, below 2%. In contrast, vacancy has increased around Grant and I-10 and within the Downtown submarket, where leasing activity has slowed. Rising crime is becoming an increasingly significant factor affecting vacancy, lease rates, and overall property values in these areas. Lease rates in the Contractor’s Way market are on the rise, driven by strong demand for warehouses with fenced yards that offer secure outdoor storage for materials, heavy equipment, and fleet vehicles. Industrial real estate in the Vail and Marana have become highly desirable. What ties these trends together is a common motivation: businesses are seeking to relocate to areas with lower crime. In addition, rising incidents of air conditioning and copper theft are pushing up insurance premiums and CAM (Common Area Maintenance) charges for both property owners and tenants. Another key factor impacting vacancy is the rise in sublease activity. As more tenants put space on the sublease market, we can expect vacancy rates to increase once those lease terms expire. Subleasing is also a leading indicator of future vacancies, even though most market data doesn’t capture it—since the original tenant is still under lease. 
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. Click below to download the Trend Report PDF 
 Max Fisher, BRD Realty, is pleased to announce the successful sale of an industrial business park in Marana, Arizona. The Old West business park, comprised of two multi tenant flex/industrial buildings with 9 tenants. These bays ranged between 1,500-3,000 SF and had 3 phase power, 12' grade level roll up doors and sprinkler systems. At the time of the sale there was no vacancy. The business park, strategically located in the heart of Marana (6898-6910 N Camino Martin), attracted strong interest from buyers due to its prime location, functional build outs, and the region’s dynamic economic growth. The sale underscores Marana’s reputation as a key hub for business expansion, with increasing demand for commercial properties fueled by population growth and a pro-business environment. The Marana real estate market has demonstrated remarkable resilience and growth, driven by factors such as a strong local economy, infrastructure investments, and a business-friendly atmosphere. With ongoing developments and increasing interest from investors, the area remains a hotspot for commercial and industrial real estate activity. For further information about this sale or future opportunities in Marana’s real estate market, please contact Max Fisher, BRD Realty. 520-465-9989 [email protected] Max Fisher, BRD Realty represented the seller, Acorn Ventures and Alex Demeroutis and Andrew Keim of PICOR represented the buyer, FJM Investments.  As we enter 2025, the Tucson industrial real estate market is showing signs of continued resilience amid broader national trends. Let’s take a closer look at the current state of Tucson's industrial sector, focusing on vacancy rates, user and investor property values, increased sub-leasing, construction activity, major projects, and national industrial real estate trends that may influence the market. Vacancy Rates: A Tight Market Tucson's industrial real estate market remains relatively tight, with vacancy rates hovering at historically low levels but higher than 2021-2023 levels. As of late 2024, vacancy for industrial properties in Tucson is around 5-6%, a figure that has stayed fairly consistent over the past year. Most of this vacancy lies within the 100,000 SF + bay market. This reflects a broader trend seen in the Southwestern U.S, where demand for industrial space outpaces supply but demand for big bay has slowed. Construction Activity: 1,000,000 SF +- In 2024 we had more industrial square footage demolished and redeveloped than built. Despite low vacancy rates, construction in the Tucson industrial real estate market has been increasing to meet demand. Developers have responded to the growing need for space by initiating several major projects breaking ground in November of 2024 and set to be completed in the second half of 2025. Around 1,000,000 SF of spec industrial is slated to be completed in 2025. These projects are focused on the mid to larger bay size range. 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 have seemed to plateau.
Demand Drivers We expect demand to remain similar to 2024 trends focusing around e-commerce, mining, defense, aerospace and the ancillary businesses that support the multifamily and SFR new construction market. One unexpected demand driver is re-development. While industrial is highly sought after, retail and multifamily values are significant 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 near Country Club and I-10 and add a new on/off ramp. Sub-Leasing Increases While vacancy remains low, we have seen distress from tenants over the past 18 months. Distress in the form of bankruptcies, defaults, and increased sub-leasing. Most of the distress stems from increases in materials and labor costs. Consumer demand remains mostly steady, while dipping in some aspects of the economy. Think big ticket items like furniture and outdoor improvements for example.
Max Fisher’s significant Q4 2024 transactions;
1455 W River - $3,850,000 Sale – Represented Buyer, Escalante Concrete – 20,000 SF 3970 S Evans Road - $1,725,000 Sale – Represented Buyer, Ninyo & Moore Geotechnical – 11,443 SF 4261 S Country Club – Represented Landlord, 420 Aviation LLC – 24,380 SF 6640 S Bonney – Represented Tenant, Sia Botanics – 9,240 SF Total transaction volume for 2024 – 78 Leases & Sales  Escalante Concrete purchased a 20,000 SF concrete tilt commercial building on a little more than 3 acres to expand current operations. For more than 35 years, Escalante Concrete Construction has provided outstanding service, workmanship and the highest quality placement of both residential and commercial concrete in Southern Arizona.
Max Fisher, BRD Realty represented the buyer and Greg Furrier, PICOR represented the seller, a subsidiary of 4d Properties.  Max Fisher, BRD Realty represented three lab transactions totaling 24,000 SF in September. The first, Ninyo & Moore Geotechnical and Engineering purchased an 11,443 SF concrete tilt industrial building at 3970 S Evans Tucson, Arizona for $1,725,000. Time Healy and Abi Robles of CBRE represented the seller, Znarf LLC.
Listings newly listed by Max Fisher, BRD Realty
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AuthorMax Fisher, Industrial Properties Broker Archives
June 2025
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