Tucson, Arizona
Tucson, located in Pima County, is the 33rd largest city in the United States and serves as a key hub in southern Arizona. Situated 108 miles southeast of Phoenix and 60 miles north of the U.S.–Mexico border, Tucson is strategically positioned for both domestic and international business opportunities. The Tucson Metro Area now boasts a population of approximately 1,070,000 residents, reflecting steady growth driven by its affordable cost of living, thriving job market, and appeal to out-of-state migrants. Tucson’s population has increased by over 50% since 2000, with more growth on the horizon.
Economic Drivers and Tech Expansion
Tucson is home to a growing tech ecosystem, anchored by the Tucson Tech Corridor (TTC) and several major technology companies. The city’s aerospace and defense industries continue to thrive, led by Raytheon Missile Systems, Texas Instruments, and Honeywell Aerospace. Other major tech employers include IBM, Intuit, and Universal Avionics. Tucson also boasts a growing presence in the bioscience sector, with companies like Ventana Medical Systems and Sanofi-Aventis further diversifying the local economy.
Ranked 13th on Milken’s Best Performing Cities for High-Tech GDP Growth, Tucson is becoming a recognized center for innovation and tech development. Its proximity to Phoenix, lower cost of living, and high-quality talent pool continue to make it an attractive destination for companies looking to relocate or expand.
Tucson’s Booming Real Estate Market
Tucson remains a top investment market for real estate. Realtor.com and Forbes have ranked the city among the top markets for investors, thanks to its affordability, job growth, and steadily increasing property values. With relatively low housing costs and a below-average unemployment rate, Tucson is expected to continue its upward trajectory in property values, making it an excellent market for investors looking for strong returns in multifamily housing.
Tucson, Arizona
Tucson is a city in Pima County, Arizona and is the 33rd largest city in the United States. The city is located 108 miles southeast of Phoenix and 60 miles north of the U.S.–Mexico border. Tucson Metro Area’s population is 1,010,030 people. Since 2000, it has had a population growth of 51.46%.
Tucson is home to the Tucson Tech Corridor (TTC) and also several big technology companies that employ thousands of Tucson residents. Raytheon Missile Systems (formerly Hughes Aircraft Co.), Texas Instruments, IBM, Intuit Inc., Universal Avionics, Honeywell Aerospace, Sunquest Information Systems, Sanofi-Aventis, Ventana Medical Systems, Inc., and Bombardier Aerospace all have a significant presence in Tucson. Tucson ranks 15 out of 200 on Milken’s Best Performing Cities in High Tech GDP Growth.
Realtor.com & Forbes Magazine recently named the city the top market in the country for investors on the basis of homes’ affordability and the city’s relatively low unemployment rate. The job market in Tucson is growing and the population in the city continues to increase. Experts predict that Tucson property values will continue to rise in the future. This could mean a big return for investors that buy now while prices and interest rates are still low.
MULTIFAMILY 2024 OUTLOOK
RENT ( Q1 2024 )
Agerage Rent : $1,180
Year-over-Year Increase: +9.3%
Occupancy (Q1 2024)
Occupancy Rate: 97.1%
Increase: +0.8%
Total Under Construction (50+ Units)
2,300 Units
Units Delivered (50+, Q1 2024)
400 Units
The multifamily market in Tucson continues to show impressive strength. Following a sharp recovery from the economic challenges of the pandemic, the city has experienced a surge in demand for rental housing. Job growth and in-migration, particularly from California and other high-cost regions, have significantly boosted occupancy rates, now at an impressive 97.1%. Rental rates have seen a robust year-over-year increase of 9.3%, one of the highest in the nation, driven by Tucson’s affordability and strong job market.
Construction activity has ramped up as developers seek to meet the growing demand. While 400 units were delivered in Q1 2024, the number of units under construction has expanded to over 2,300, ensuring a healthy supply pipeline for the coming years. Despite this, demand is expected to continue outpacing supply, driving further rent growth and maintaining high occupancy rates.
MULTIFAMILY 2024 OUTLOOK
RENT ( Q1 2024 )
Agerage Rent : $1,180
Year-over-Year Increase: +9.3%
Occupancy (Q1 2024)
Occupancy Rate: 97.1%
Increase: +0.8%
Total Under Construction (50+ Units)
2,300 Units
Units Delivered (50+, Q1 2024)
400 Units
The Tucson market had a sharp rebound from the COVID-19 Recession and is experiencing strong in migration from out-of-state markets and job growth, creating strong apartment demand and exceptionally high occupancy rates. Out-of-state businesses are targeting Tucson to relocate their headquarters or open new facilities on the count of a vast talent pool presence, affordable living, and a favorable business/tax environment.
In Q1 2021, Tucson posted one of the highest year-over-year rent growth increases in the nation, beating out Phoenix. For multifamily development, zero units were delivered in the first quarter of the year, the same as Q1 2020. That being said, both the number of units under construction and in the planning stages, increased year-over-year as developers try to combat the issue of low supply. The 2021 outlook for Tucson’s multifamily market appears to be bright. The metro’s strong demand, lower cost per unit prices, and high cap rates will continue to attract a plethora of buyers targeting the Tucson multifamily market in 2021.
Strategic Relocation Destination
Tucson’s appeal to businesses is growing, as companies from out-of-state target the area for its skilled workforce, affordable living, and favorable business environment. The city’s lower cost of living (still 5% below the national average) and pro-business tax policies make it an ideal location for expanding firms. As a result, Tucson continues to attract new residents and businesses, fostering sustained rental demand for multifamily properties.
Tucson’s Advantages for Multifamily Investors
- Ranked #1 in the nation for rent growth in Q3 & Q4 of 2023.
- Projected average annual rent growth of 6.8% over the next five years.
- Tucson remains one of the most affordable metro areas in the Western U.S.
- The University of Arizona, a leading public research institution, contributes to the city’s vibrant student housing market and drives innovation in the local economy.
- Tucson International Airport, a key regional transportation hub, contributes over $8 billion annually to the Arizona economy.
Key Highlights of Tucson MSA:
- High rental demand driven by strong population and job growth.
- Projected rent growth well above national averages.
- Affordable cost of living and business-friendly environment.
- Significant presence of major tech and aerospace employers.
- Robust construction pipeline to meet rising housing demand.
Tucson remains one of the most attractive markets for multifamily investments, offering a combination of high returns, strong demand, and affordability. With continued in-migration, job creation, and rising rental rates, the outlook for Tucson’s multifamily sector is exceptionally bright.
- Tucson ranked #1 in the Nation for rent growth in Q3 & Q4 2020
- Average annual rent growth for the next 5 years is projected to be 6.1%/year
- Tucson is 6% under national average for cost of living
- Home to the University of Arizona , a leading public research University
- Tucson International Airport contributes $7.4 billion to the Arizona economy
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