November 6, 2025

As organizations across Southern Arizona shift their focus to 2026 planning cycles, commercial real estate decisions are moving from reactive to strategic. For chief financial officers (CFOs), operations leaders, and facilities managers in Tucson’s key industries—aerospace and defense, optics and photonics, mining services, logistics, specialty manufacturing, healthcare, and education, the question isn’t just “Do we renew?” but “What configuration of space, location, and lease terms positions us for the next phase of growth?”

The Tucson market is maturing in ways that reward informed decision-making. Here’s what companies should watch for as they plan their 2026 real estate needs, and why engaging a tenant representative early in the process can mean the difference between a commodity lease and a competitive advantage.

Trends Shaping Tucson’s 2026 Commercial Real Estate Landscape

1. Flight to Quality—and Flexibility: Tenants are increasingly willing to pay a premium for modern infrastructure: better HVAC, higher power capacity, dock-high loading, and flexible floor plates. The pandemic-era “good enough” mindset gives way to strategic thinking around employee retention, operational efficiency, and future-proofing. Expect landlords with aging product to offer concessions, while Class A and newer industrial/flex space commands tighter cap rates and lower vacancy.
   Planning implication: If your lease expires in 2026 or early 2027, start touring alternatives now—ideally 18–24 months out. Quality space leases faster, and early movers secure better economics.

2. Industrial and Logistics Demand: Tucson’s position along Interstate 10 and Interstate 19, proximity to the U.S.–Mexico border, and expanding cargo operations at Tucson International Airport continue to attract distribution, light manufacturing, and last-mile logistics users.
   Planning implication: If you’re in logistics, e-commerce fulfillment, or manufacturing, evaluate whether a build-to-suit or early commitment on spec space locks in rate and location advantages before the market tightens further.

3. Office Occupancy Is Bifurcating: Remote and hybrid work have permanently reduced average office utilization, but that doesn’t mean all sectors are shrinking. Professional services, finance, and back-office functions are rightsizing or subleasing excess space. Meanwhile, healthcare, engineering, and government contractors—especially those with secure or collaborative requirements—are holding steady or selectively expanding into better buildings with amenities that support recruitment.
   Planning implication: Audit your actual utilization, not your lease square footage. A 30% reduction in rentable area paired with a move to higher-quality space can be cash-flow neutral—and a talent magnet.

4. Landlord Leverage Is Normalizing: After a period of tenant-friendly concessions (2021–2023), landlords with well-located, well-maintained properties are regaining pricing power. Free rent periods are shortening, and tenant improvement allowances are stabilizing. That said, competition for creditworthy tenants remains fierce, and landlords will still negotiate—especially if you bring multiple options to the table.
   Planning implication: This is not a market where you can wait until 90 days before lease expiration and expect leverage. Early engagement, market intelligence, and a credible alternative are your negotiating currency.

5. Sustainability and Energy Costs Are Now Line Items: With Arizona’s summer heat and rising utility rates, energy efficiency is no longer a “nice to have.” Solar-ready roofs, LED retrofits, and ENERGY STAR certification are becoming standard due diligence questions. For manufacturing and data-dependent users, power availability and cost per kWh can swing total occupancy cost by 10% or more.
   Planning implication: Request utility historical and submetering data during tours. If you’re evaluating a long-term commitment or purchase, model solar payback and demand charge impacts.

6. Tariffs Unpredictability: In today’s unpredictable trade environment, with tariffs spiking and global supply chains under pressure, businesses are scrambling to protect their bottom lines. Foreign-based companies that want to do business in the United States can establish a presence here by bringing manufacturing onshore or nearshore. This can be accomplished in a number of ways including taking advantage of Foreign Trade Zones (FTZs).
   Planning implication:  Many companies are currently looking to establish a presence in the United States through the purchase of commercial real estate in FTZ’s and other strategic spaces. The premium space in these areas will be less and less available in coming months. The time is now to make and move on such plans.

How These Trends Translate by Industry:  Key Considerations for 2026 

Aerospace & Defense

• Likely Decision: Expand or relocate into secure, high-clearance, fully conditioned space.

• Key Considerations: Proximity to Davis-Monthan AFB and major primes; 800–1,000+ amps and fiber redundancy; controlled access, secured yard, and ITAR/FSO workflows. Align delivery with rising federal spend and compressed program timelines.

Optics/Photonics

• Likely Decision: Upgrade to Class A lab/flex to support on-/near-shored production.

• Key Considerations: Vibration isolation; ISO 8–6 cleanroom capability; specialty power, DI water, exhaust; low-particle finishes. Inventory is limited; TI lead times are long—start programming early and consider modular cleanroom inserts.

Mining Services

• Likely Decision: Consolidate yard, warehouse, and office into a single operational hub.
  

• Key Considerations: Access to regional sites entering permitting/expansion; outdoor laydown; high-bay service bays; parts storage; stormwater and circulation for heavy trucks. Balance rent with functionality and turn radius.

Logistics & Distribution

• Likely Decision: Pre-commit to new spec industrial or secure existing big-box/build-to-suit.
• Key Considerations: Dock count, clear height, ESFR (as needed), trailer ratios, deep truck courts, and immediate I-10/I-19 access. Tucson enables one-day reach to major population centers and offers cross-border optionality for U.S. footprint needs.

Healthcare

• Likely Decision: Renew with targeted renovations or relocate to a modern MOB.
• Key Considerations: Patient access and wayfinding, high parking ratios, ADA compliance, co-location with imaging/lab, after-hours HVAC economics, slab/elevator loading for equipment. Align TI scope with landlord contributions.

Professional Services & Back Office

• Likely Decision: Right-size and upgrade to amenitized workplaces with collaboration zones.
• Key Considerations: Hybrid seat ratios, conference density, focus-to-open balance, parking, and proximity to talent (UA/downtown). Incorporate wellness, acoustics, and flexible demountable partitions.

Tucson Submarket Cues

• Defense/Advanced Mfg.: Airport/SE industrial corridors; secure access; heavy power.
• Optics/R&D: Class A flex near UA/innovation nodes.
• Distribution: I-10/I-19 corridors for regional reach and cross-border flexibility.
• Healthcare/Back Office: MOB clusters and near-UA/downtown for patient and talent access.

Why a Tenant Representative Is Your Strategic Partner (Not Just a “Broker”)

Most decision-makers understand the transactional role of a commercial broker. But a true tenant representative operates differently—and the distinction matters when you’re planning 12 to 1 months out for a 2026 or 2027 occupancy.

1. Why Engage a Tenant-Only Representative

• Conflict-free advocacy: We represent users, not landlords.
• Structured competition: RFPs, apples-to-apples comparisons, and total-cost modeling (rent, TIs, downtime, OpEx).
• Risk protection: Expansion/contraction rights, renewal/termination mechanics, OpEx protections, realistic TI schedules.

2. Market Intelligence You Can’t Google: A tenant rep tracks off-market opportunities, upcoming vacancies, landlord financial stress, and which properties are about to hit the market. In Tucson’s mid-sized market, relationships unlock deals that never make CoStar.
3. Financial Modeling Beyond the Rate Per SF: Rent is one line item. A tenant rep models:

• Effective rent (accounting for free rent, TI, and escalations)
• Operating expense reconciliations and CAM caps
• Expansion/contraction options and their economic impact
• Purchase vs. lease analysis, including sale-leaseback structures
• This turns a “gut feel” decision into a defendable financial analysis.

4. Leverage Through Competition: Landlords are more willing to negotiate and make concessions when they believe you have a legitimate alternative. A tenant rep creates that leverage by running a parallel process: touring 3–5 buildings, issuing requests for proposal (RFPs), and negotiating multiple letters of intent (LOIs) simultaneously. Even if you intend to renew, a competing offer can reduce rent, increase TI, or secure a termination option you wouldn’t have otherwise.
5. Lease Language That Protects You: Most landlords use their own paper. That means their attorney wrote the first draft. A tenant rep negotiates clauses that matter in year three of a five-year lease:

• Assignment and sublease rights (what if you’re acquired?)
• Exclusive use and non-compete (especially in retail or medical)
• Force majeure and rent abatement (what if the roof leaks or HVAC fails?)
• Renewal options with defined economic terms (not “prevailing market rate”)

6. Project Management Through Delivery
   Once the lease is signed, a tenant rep ensures the landlord delivers on TI commitments, coordinates with your architect and contractors, and enforces timelines so you’re not paying double rent because construction dragged.

The Importance of Starting Early: Time Is Your Greatest Asset

One of the most critical pieces of advice we give our clients is this: start your commercial space search early. When you’re looking to relocate or secure new space, giving yourself plenty of time puts you in the driver’s seat. Ideally, you should begin the process 12 to 18 months before your current lease expires or before you need to occupy new space. Here’s why timing matters so much:

• Leverage in Negotiations: When you have time on your side, you have negotiating power. Landlords know you have options and aren’t desperate, which puts you in a stronger position to secure favorable terms, better pricing, and valuable concessions.
• More Options to Choose From: Starting early means you can explore the full range of available properties. You’re not limited to what’s immediately available—you can consider spaces that might become available in your ideal timeframe.
• Time for Due Diligence: Proper evaluation of spaces, financial analysis, lease review, and negotiation all take time. Rushing through these critical steps can lead to costly mistakes.
• Build-Out and Customization: If your space needs tenant improvements or customization, construction takes time. Starting early ensures your space is ready when you need it.
• Avoid Desperation: Waiting until just a few months before your lease expires puts you at a severe disadvantage. Your current landlord knows you’re running out of time, limiting your ability to negotiate renewal terms. Other landlords also recognize your urgency, reducing your leverage across the board.

Conclusion

Tucson’s commercial real estate market rewards preparation. Whether you’re renewing, relocating, expanding, contracting, or exploring ownership, the decision should be driven by your operational strategy, financial model, and competitive positioning—not by the expiration date on your lease.

Need help thinking through your 2026 real estate strategy? A tenant representative brings market intelligence, financial modeling, negotiating leverage, and execution discipline to the table. In a market where every basis point and every clause matters, that’s not a luxury—it’s a competitive edge.

To learn more about what a tenant-only representative can do for you, please call Michael Coretz of Commercial Real Estate Group of Tucson at 520-770-9221 or visit www.cretucson.com. To schedule a call with Michael, please click here: Calendar Link.