Tucson Q1 Market Report: With Rents on the Rise, Cap Rates Compress

Highlights:

  • Operating conditions in the Tucson multifamily market strengthened during the first quarter. Vacancies tightened and rents rose. Apartment completions have been limited to this point but are forecast to accelerate.
  • The vacancy rate dipped 20 basis points in the first quarter to 5.9 percent. This is just the second time in the past 10 years that the rate has fallen below 6 percent.
  • Asking rents continued on their upward trajectory, ending the first quarter at $794 per month. Rents have increased by 8 percent in the past 12 months.
  • The investment market was mixed to start the year. The number of sales retreated, but prices rose and cap rates compressed. The median price reached $62,300 per unit, while cap rates dipped into the mid-5-percent range in transactions that closed during the first quarter.

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