TALE OF THREE CITIES – REVISITED 9-2026
The purpose of this report is to show the strengths and weaknesses of Tucson, Arizona, and its sister cities, namely Albuquerque, New Mexico, and El Paso, Texas. This trio is a sisterhood, as they have many commonalities, including climate and population size. They also all share the distinction of a military base and a university. The statistics and data shown herein illustrate the big picture and may not reflect exact figures. Since our last publication in September of 2025, there
have been some changes. There is currently less emphasis on renewable energy and more on AI, data centers, and the electricity infrastructure to power them. Across all three cities, this growth is shaped by ongoing water scarcity, which has become a major concern for large new developments. The three cities are also seeing major market shifts like the rest of the nation due to tariffs, inflation, immigration policies, and significant changes to federal priorities.
Tucson, Arizona
Tucson is about 60 miles north of the US-Mexico border and about 100 miles south of Phoenix, Arizona. The metropolitan population is about 1.08 million. Major industries in Tucson include defense/aerospace, healthcare, and mining. The University of Arizona is a major economic driver in the Tucson area. A large entertainment venue is currently under construction, known as the Mosaic Quarter, along the southeast side of I-10 and Kino Parkway. The project will include a 3,000-seat ice rink, large field house, sportsplex, and pavilion.
The current real estate trends have changed since last year, with continued emphasis on solar energy, and more focus on the AI and tech industry. Tucson has also become a distribution hub for Southern Arizona with the Port of Tucson, a full-service inland port, rail yard, and intermodal facility. The port consists of 829 acres with 50,000 linear feet of rail track, offering cold storage, dry storage, distribution, and manufacturing. Amazon operates five facilities in the Tucson area, including an 855K SF fulfillment center at the Port of Tucson that opened in 2019, a last-mile delivery hub near I-10 and Silverlake Road, a roughly 270K SF sortation center near the airport, an administrative office, and the newest, a 220K SF delivery station in Marana. The Marana facility is complete and beginning phased operations at reduced staffing after Amazon lowered its initial hiring projection from 500-700 down to about 200. Tucson International Airport continues to expand with new upgrades, safety enhancements, expansions, and maintenance projects.
In 2026, Tucson Electric Power completed the Roadrunner Reserve project, a battery energy storage system in southeast Tucson. Built in two 200-megawatt phases, the first online in summer 2025 and the second in mid-2026, the completed system totals 400 megawatts and 1,600 megawatt-hours. It represents a roughly $350 million investment and can power about 85,000 homes for four hours during peak demand. In August of 2026, Repsol, a Spanish utility company had plans of constructing at 5,554-acre solar array and battery storage infrastructure, including access roads, underground electricity collection lines, and a substation. The total cost is estimated at $575 million and will create 600 construction jobs and about a dozen permanent jobs. The company plans on beginning construction in 2027, and completing the project in 2029. The company has not released details on where the power will be connected and what it will be used for. The project is in preliminary stages and has received much opposition from area residents.
The most controversial development has been “Project Blue,” a multibillion-dollar AI data center campus developed by Beale Infrastructure, backed by Blue Owl, on a 290-acre site north of the Pima County Fairgrounds. Originally tied to Amazon Web Services as the anchor customer, the roughly $3.6 billion project was planned in phases and could ultimately span up to 10 buildings and 2 million square feet, with 600 megawatts of power capacity. The project drew intense opposition over its water and electricity demands and the secrecy surrounding it, with city officials revealing it would use more water than four golf courses at full buildout and draw more power than any other Tucson Electric Power customer. In August 2025, the Tucson City Council rejected the project on a 7-0 vote, declining to annex the property and effectively blocking access to Tucson Water. The developer advanced it through other channels, as the Arizona Corporation Commission approved a TEP energy service agreement in December 2025 and the Pima County Board of Supervisors approved a binding agreement that same month, with construction beginning in 2026. However, Amazon withdrew as the end user that same month, and the project has since lacked a confirmed customer. The project is expected to create roughly 3,000 construction jobs and about 180 permanent positions, but the broader backlash has reshaped local policy, with Tucson adopting strict new data-center limits, Pima County developing a moratorium and impact-analysis requirements, and the state enacting a three-year pause on new data-center tax incentives in 2026.
