While developers have focused primarily on BTS over the last several years, the need for speculative office development will rise amid tightening vacancy.
Tenant activity was strong in the Tucson office market with the highest level of quarterly net absorption in three years.
In the second quarter of 2019, net absorption totaled 325,882 sq. ft. outpacing the total net absorption for all last year.
In the second quarter of 2019, market-wide vacancy fell 117 bps year over year to 10.2%. The rate is down significantly from its recessionary peak of 21.3% due to steady tenant demand and limited new supply.
The market-wide average asking lease rate declined to $21.14 per sq. ft. FSG in the second quarter.
One office completion totaling 200,000 sq. ft. came online during the second quarter of 2019 and 13,840 sq. ft. of office space is under construction.