Currently, the divergence in distributions of design and operational data, and large computational complexity are limiting factors in the adoption of CNNs in real-world applications. For instance, person re-identification systems typically rely on a distributed set of cameras, where each camera has different capture conditions. This can translate to a considerable shift between source (e.g. lab setting) and target (e.g. operational camera) domains. Given the cost of annotating image data captured for fine-tuning in each target domain, unsupervised domain adaptation (UDA) has become a popular approach to adapt CNNs. Moreover, state-of-the-art deep learning models that provide a high level of accuracy often rely on architectures that are too complex for real-time applications. Although several compression and UDA approaches have recently been proposed to overcome these limitations, they do not allow optimizing a CNN to simultaneously address both. In this paper, we propose an unexplored direction -- the joint optimization of CNNs to provide a compressed model that is adapted to perform well for a given target domain. In particular, the proposed approach performs unsupervised knowledge distillation (KD) from a complex teacher model to a compact student model, by leveraging both source and target data. It also improves upon existing UDA techniques by progressively teaching the student about domain-invariant features, instead of directly adapting a compact model on target domain data. Our method is compared against state-of-the-art compression and UDA techniques, using two popular classification datasets for UDA -- Office31 and ImageClef-DA. In both datasets, results indicate that our method can achieve the highest level of accuracy while requiring a comparable or lower time complexity.