There are as many as 10 office development projects under way in the city, but nearly every one involves single-story, campus-like office projects. Developers are building 3,000-sf to 12,000-sf structures that are for sale or lease in campus designs of five to 15 buildings. At the start of the second quarter, nearly 600,000 sf of office space had been under construction.

"It eliminates as much of the risk as possible," Volk says. "It allows them a quicker delivery time and it eliminates the risk of overbuilding, and, quite frankly, it is much easier to go to the bank and finance each individual building rather than a 150,000-sf development all at once."

Neighborhood opposition to high-rise buildings also has forced developers to lean toward smaller, office condominium projects, Volk says. "There are very few places left in Tucson where you could build a high-rise building without significant neighborhood opposition," he says. "They have a big say in what's going on in Tucson."

There is a five-story, 115,000-sf office project going up at the southwest corner of N. Park Avenue and East 2nd Street, but it will be used by the Marshall Foundation, a charitable organization. Ground will break in October on that $17-million undertaking delivery scheduled for December 2002. The site is surrounded by other high-rise office projects and is near the University of Arizona campus.

Most of the city's office development in the past few years has focused in the north and east areas, which are among the fastest growing in population, Volk says. The most upscale homes are in the north and east, which attracts upper management and company owners looking for office space in the area. At the start of the second quarter, the vacancy rate for office space in the Foothills area had been 1%. The overall office vacancy at the start of the second quarter had been 12.4%, up from 9.9% a year ago.

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Tucson's Office Projects Take on New Look

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