Q4 2022 Multifamily Real Estate Report: Tucson, AZ
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Tucson, AZ multifamily real estate market performance in Q4 2022 was challenged by rising vacancies, low and decreasing sales volume, and no new unit deliveries.
The population in Tucson in Q4 2022 was 1,003,000 in 2022 at a 1.01% growth rate. The unemployment rate in Tucson reached 3.3% at the close of the year.
General Area Overview & Demographics
The racial/ethnic makeup of Tucson is as follows: 77.6% White (including Hispanic or Latino), 5.4% Black or African American (non-Hispanic), 3.9% Asian (non-Hispanic), 2.1% American Indian or Alaska Native, 0.4% Pacific Islander (non-Hispanic), 8.5% from other races and 5.2% from two or more races. The population of Tucson includes 28.7% Hispanic or Latino people of any race.
Tucson, AZ Median Household Income & Population
According to the 2019 U.S. Census, the median household income in Tucson is $52,622. This is lower than the national median of $68,703. Of those households, 9% make less than $25,000, and 8% make over $150,000. The poverty rate in Tucson is 18.7%.
Tucson’s population is relatively young, with 28.2% of the population under 18 years old and 14.3% between 18-24 years old. The median age in Tucson is 31.9 years old. 25.5% of the population is over 45 years old and only 9.3% are over 65 years old. The largest age group in Tucson is between 25-44 years old, representing 31.2% of the total population. The city’s real estate sector, according to recent data, is also one of the best for women to work in.
Several higher education institutions are located in the city, including the University of Arizona, Pima Community College, and many other private and public universities. The University of Arizona is the largest in the city and enrolls over 44,000 students each year.
Tourists from all over the world frequent Tucson. Some of the major attractions in Tucson include Sabino Canyon, Saguaro National Park, and the Arizona-Sonora Desert Museum. Other popular attractions include Colossal Cave Mountain Park, San Xavier Mission del Bac, Tucson Botanical Gardens, and Reid Park Zoo.
Tucson has a hot desert climate with long and hot summers, mild winters, and low annual rainfall. The average daily temperature in summer is around 97 °F (36 °C), while the average winter temperature is around 60 °F (16 °C). On average, Tucson receives only 9.8 inches of precipitation per year.
Summary of Tucson Multifamily Real Estate Performance in Q4 2022
Vacancies rose to 7.4% in Tucson’s multifamily real estate market in Q4 2022, an approximate 1.5% increase quarter-over-quarter from Q3.
Class A property vacancies were at 5.8% by the close of the year.
What are multifamily rents like in Tucson?
Average rent for Tucson multifamily real estate declined 1% in Q4 2022 to about $1,157 per month, the first quarterly rent decline seen in the city in seven years.
Although average rent declined overall, Class B property rent increased in Q4 2022 to $1,279 per month.
Purchase & Leasing Activity
Multifamily sales volume fell nearly 50% quarter-over-quarter from Q3 at the close of the year. Year-over-year, sales were down overall by 35%.
The average sales price was $151,400 per unit in Q4 2022. For the year, the median sales price per unit was $149,700.
Notable Multifamily Real Estate Deals in Tucson in Q4 2022
There were several notable deals that took place for Tucson’s multifamily real estate in Q4 2022:
- Sol y Luna sold 341 units for $203,000,000 at $595,308 per unit.
- Villa Las Toronjas II sold 279 units for $42,500,000 at $152,330 per unit.
- Elevate Apartments sold 144 units for $21,800,000 at $151,389 per unit.
- Dakota Canyon sold 80 units for $9,500,000 at $118,750 per unit.
These are select examples among other activity.
New Multifamily Real Estate Development Activity in Tucson in Q4 2022
New multifamily deliveries were low for the year, with approximately 310 units having come online in 2022, nearly a 50% decrease year-over-year.
No new units were delivered for Tucson’s multifamily real estate market in the fourth quarter of the year.
New construction projects added to the pipeline reached 2,840 units at the close of the year, nearly double the amount under construction from 2021.
Market Forecast for Tucson’s Multifamily Real Estate Market
Deliveries are projected to increase in 2023 with approximately 2,000 units expected to be completed. These new deliveries will likely push vacancies higher as Class A inventory increases.
Multifamily rents in Tucson are projected to rise modestly by 2% in 2023.
Takeaways for Multifamily Real Estate Investors
Investors may notice a rise in new multifamily construction in 2023. While new Class A units are under construction, the number of units within this category remains relatively small. Investors may do well to acquire property within this competitive category or look to invest in a new build.
Do your research, stay diligent, and happy investing.
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