As a result, the market was not overbuilt with speculative multi-tenant medical office buildings. "In that sense, we didn't have a glut of space, so we're healthier than many other markets,"Nieman says.

No research is available that specifically tracks medical office space, but data shows that Tucson's entire office market is outperforming most national markets. For example, the city ranks as number 19 on Marcus & Millichap's National Office Index, and the firm's 2010 National Office Report says that minimal inventory growth will slow vacancy increases and limit rent declines in Tucson this year.

Local payrolls are projected to expand by 1,500 jobs, or 0.4%, in 2010, including 500 office-using positions, representing growth of 0.7%. Despite a forecast 40 basis point rise to 15% this year, vacancy in Tucson will remain well below the national average.

Asking rents are projected to contract 1.2% in 2010 to $21.49 per square foot, while effective rents will drop 3.3% to $16.88 per square foot. Last year, when vacancy spiked 220 basis points, asking and effective rents fell 0.2% and 4.4%, respectively.

Meanwhile, developers are expected to bring just 25,000 square feet online in 2010, a 0.4% addition to inventory. Last year, 103,000 square feet of office space came online, the largest annual delivery in three years, according to Marcus & Millichap.

Sales velocity for medical office buildings slowed less dramatically than activity for traditional office space, and the metro's high concentration of retirees should support medical office space demand going forward, says David Guido, regional manager of Marcus & Millichap's Tucson office.