Commercial Real Estate Costs Across Arizona
Commercial real estate includes office buildings, retail spaces, industrial warehouses, and multi-family properties. Investment costs range from $500,000 for small retail properties to millions for large office buildings. Lease rates are quoted per square foot annually, with office space averaging $20-$40 per sq ft and industrial space at $8-$15 per sq ft in most markets.
In Arizona, costs for commercial real estate vary significantly between urban and rural areas. Major metropolitan areas like Phoenix, Tucson, Mesa typically have higher rates due to increased demand and labor costs, while smaller communities may offer more competitive pricing.
Commercial Property Types and Prices
Small retail spaces cost $200,000-$1,000,000. Office buildings range from $500,000 to $50+ million. Industrial warehouses cost $100-$200 per sq ft. Multi-family apartment buildings trade at $100,000-$300,000 per unit. Medical office buildings command premium prices at $250-$400 per sq ft. Mixed-use developments combine retail and residential at $200-$500 per sq ft.
Commercial Lease Rates
Office space leases average $20-$40 per sq ft annually in major markets. Retail space runs $20-$60 per sq ft depending on location and foot traffic. Industrial and warehouse space costs $8-$15 per sq ft. Triple net (NNN) leases require tenants to pay property taxes, insurance, and maintenance in addition to base rent. Gross leases include all operating expenses in the quoted rate.
Commercial Financing
Commercial mortgages require 25-35% down payments. Interest rates run 5-8% for conventional commercial loans. SBA 504 loans finance owner-occupied commercial property with 10% down. Commercial loan terms range from 5-25 years with amortization periods of 20-30 years. Balloon payments are common at 5-10 year terms. Debt service coverage ratios of 1.25x or higher are required.