Tucson economy draggingPosted: Updated:
TUCSON, Ariz. -- The commercial real estate market is often used as a bell-weather for the local economy as a whole. And right now indications are we're dragging along the bottom, with the recovery looking slow.
Wednesday, Tucson Realty and Trust issued its mid-year report and year-end forecast.
Drive just a couple blocks and you can't help but run into "for lease signs" in commercial blocks throughout Tucson. And of course there's plenty of "For Sale" signs in front of houses.
"The message we want to get out to everybody is whether you're a commercial user or a residential user looking to buy a home, now is the time to buy," said Tucson Realty and Trust Co. President Hank Amos.
Economists often point to real estate numbers as an indicator of the economy as a whole.
"At the beginning of the year we kind of thought optimistically things were kind of getting better. And it started that way. But the economy really didn't pick up steam. Things are bad nationally. Our local housing market hasn't really picked up," said Amos.
Aspects of the national economy, such as unemployment, gas prices and consumer confidence trickle down to Tucson, but Amos says the housing market is Tucson's biggest bellwether.
"Tucson's all about the residential housing market. So when the housing market picks up, our economy's going to pick up," said Amos.
That hasn't happened. According to the Tucson Realty and Trust analysis, residential land sales are down 53% the first half of this year compared to last year.
Residential building permits are on pace to finish 2011 with an 18% drop. To put it in perspective, the 1800 permits estimated to be issued this year is down from 12,000 in 2006.
But Amos says everything is aligned for the market to pick up again.
"Prices are not going to really drop that much more. Interest rates are almost at historic lows," said Amos.
But it'll take people to start buying.
When it comes to retail space, there has been some major expansion from large companies, but landlords are lowering rent and giving other perks to get vendors to move into their space.
The vacancy rate is between 8.6 and 8.7% and it is projected to be down to 8.1% by the end of the year.