Southern Arizona, particularly Tucson, has become a prime location for logistics and distribution companies looking to capitalize on its strategic advantages. From its proximity to key trade routes to its expanding industrial real estate market, the region is well-positioned to support supply chains both regionally and nationally. This article explores the key benefits of establishing logistics and distribution operations in Southern Arizona.

Strategic Location for Trade and Transportation

One of the most significant advantages of Southern Arizona is its strategic location in relation to major trade routes and transportation hubs. Tucson sits near the intersection of Interstates 10 and 19, offering seamless access to major markets in California, Texas, and Mexico. With Tucson International Airport nearby, businesses have access to an air cargo hub that facilitates quick and efficient transportation of goods.

Proximity to Mexico is particularly beneficial, as Tucson serves as a gateway to international trade. The city’s close ties to Mexican manufacturing sectors make it an ideal location for businesses involved in cross-border logistics. This proximity allows for cost-effective movement of goods between the U.S. and Mexico, reducing transit times and lowering transportation costs for companies that rely on international trade.

Thriving Commercial Real Estate Market

In recent years, Tucson has experienced a noteworthy supply influx that has impacted its commercial real estate market. Last year, the city received one of the most significant industrial space additions in recent memory. While the increase in available space caused the metro-wide vacancy rate to rise to 5.8%, it is a temporary effect as the new inventory takes time to be absorbed by the market.

Despite the uptick in vacancy rates, the overall market remains relatively tight. The current vacancy level is comparable to what was observed before the COVID-19 pandemic, highlighting the resilience of Tucson’s commercial real estate sector. Steady leasing activity continues to support the performance of properties across the metro, ensuring that the market remains stable even with the new supply.

Growing Demand for Logistics and Warehousing Space

A major driver of demand in the Tucson industrial market has been logistics and distribution tenants, particularly in the warehousing sector. These businesses have increasingly targeted locations near Tucson International Airport, where transportation infrastructure and proximity to key trade routes provide a strategic advantage. The rise in e-commerce and the demand for faster shipping times has further fueled the need for distribution and warehousing space in the area, making it an attractive destination for national and regional logistics firms.

As e-commerce continues to expand, consumers are demanding faster delivery times, which places pressure on supply chains to position distribution centers closer to end customers. Tucson’s proximity to major cities and transportation networks allows companies to reduce shipping times, improve customer satisfaction, and cut operational costs. These factors contribute to a steady demand for industrial real estate, particularly in areas well-served by infrastructure like Tucson International Airport.

Competitive Real Estate Costs

Compared to other major logistics hubs like Phoenix, Tucson offers more competitive real estate pricing. For businesses seeking to optimize their operational costs, this is a significant advantage. Companies can secure larger, more advanced facilities at lower costs, allowing them to scale their operations without the higher expenses associated with larger metropolitan areas.

In addition to lower property costs, Tucson’s cost of living is more affordable compared to neighboring states and cities. This benefits employees and makes the area an attractive place for workers, which helps companies maintain a stable workforce. Access to affordable land and real estate means businesses can invest in building large-scale distribution centers or warehousing complexes without breaking the bank.

Skilled Workforce and Economic Development Initiatives

Tucson benefits from a skilled labor pool, particularly in logistics, manufacturing, and distribution. With several colleges and universities in the area, including the University of Arizona, companies have access to a highly educated workforce trained in key sectors like engineering, supply chain management, and information technology.

Economic development initiatives in Southern Arizona further enhance the appeal of the region for businesses. Various incentives are available to companies that invest in infrastructure and job creation, particularly in industries that drive economic growth, like logistics and distribution. These programs make it easier for companies to expand their operations in Tucson and contribute to the local economy.

Sustainability and Environmental Initiatives

As more companies focus on sustainability in their supply chain operations, Southern Arizona offers unique advantages for businesses committed to environmental responsibility. The region’s emphasis on sustainable building practices and energy efficiency aligns with the growing trend toward green logistics.

Companies can benefit from Tucson’s renewable energy resources, such as solar power, to reduce their carbon footprint and cut operational costs. Additionally, the availability of sustainable infrastructure options like energy-efficient buildings and LEED-certified industrial spaces allows businesses to meet their environmental goals while optimizing operational efficiency.

Resilience in a Competitive Market

This supply-demand dynamic underscores the importance of Tucson’s role as a logistics hub in Southern Arizona. With its strategic location, competitive real estate offerings, and growing appeal to logistics tenants, Tucson is well-positioned to continue its growth trajectory in the industrial market despite the recent supply additions.

The resilience of Tucson’s logistics market is evident in the continuous interest from national and regional logistics firms. Despite temporary fluctuations in vacancy rates, the long-term outlook remains positive. As businesses continue to seek out well-located, cost-effective real estate options, Tucson’s industrial market will likely see steady growth, driven by its unique strengths in logistics and transportation.

Conclusion

Southern Arizona, particularly Tucson, offers numerous advantages for businesses in the logistics and distribution sectors. Its strategic location near major trade routes, competitive real estate market, access to a skilled workforce, and emphasis on sustainability make it an ideal hub for logistics operations.

While the new space has momentarily increased vacancy rates, Tucson’s industrial market remains healthy. The rising interest in logistics and distribution space near the airport highlights the city’s importance in supporting regional and national supply chains, ensuring that the additional space will be absorbed as demand continues to grow.

Need Commercial Real Estate Advisor Services in Tucson, AZ?

Here at Commercial Real Estate Group of Tucson, LLC, we’re here to help you make the most informed decisions for your commercial real estate leasing and investment needs. Whether you’re looking for expert financial analysis, up-to-date data on the Tucson market, or specialized knowledge in industries like aerospace, mining, and logistics, we’ve got the resources and expertise to guide you every step of the way. Reach out to us today to explore how we can support your business growth and navigate the Tucson commercial real estate landscape with confidence!