Investing in the Arizona Commercial Real Estate Market

Arizona commercial real estate market

Investing in the Arizona commercial real estate market has paid huge dividends over the past decade. Arizona is known for its stunning landscapes, vibrant cities, and a booming real estate market. It is one of the best states to invest in commercial real estate! Arizona’s diverse economies, favorable business climate, and growing population have made it a hotspot for commercial real estate investments. The state’s unique combination of factors makes it a compelling choice for investors seeking opportunities in the commercial real estate market.

Why you should consider investing in the Arizona commercial real estate market

Robust economic growth

One of the primary reasons to invest in Arizona commercial real estate is its strong and diversified economy. The state has experienced consistent economic growth in recent years, driven by a variety of sectors including technology, manufacturing, healthcare, and tourism. The business-friendly environment and favorable tax policies have attracted companies from across the United States, creating a steady demand for commercial real estate space. (Arizona’s business growth, the best investment opportunity)

According to,“The Grand Canyon state has been climbing multiple economic rankings that situate it as one of the best places for business in the United States over the years. Arizona ranks high in economic performance, talent attraction, quality of life, startup survival rates, and growth.”

Population growth

Arizona’s population has been consistently growing, attracting new residents from other states due to its favorable climate, job opportunities, and affordable cost of living. The increased population creates a higher demand for commercial real estate, such as retail spaces, office buildings, and multifamily housing complexes, making it a lucrative investment opportunity.

Arizona’s population fell in the year 2020 but according to National Association of Home Builders, Arizona’s population grew by 1.3% between 2021 and 2022 – that’s the eighth-fastest rate of growth in the country!

Business friendly environment

Arizona is known for its business-friendly environment. The state offers lower corporate taxes, reduced regulations, and competitive labor costs, making it an appealing destination for companies looking to establish or expand their operations. This business-friendly climate ensures a steady flow of tenants and customers for your commercial properties. As businesses thrive and expand, the demand for commercial real estate properties follows suit.

Tourism and hospitality

Arizona is a popular tourist destination, attracting visitors from all over the world. Tourist hotspots like the Grand Canyon, Sedona, and Scottsdale contribute to the state’s vibrant hospitality and tourism industry. The tourism industry is a significant driver of the state’s economy, leading to consistent demand for hospitality and retail properties.

Infrastructure and Connectivity

The state of Arizona is committed to infrastructure development, with significant investments in transportation, including highways, airports, and ports that facilitate the movement of goods and people. This connectivity is essential for businesses, making Arizona an appealing location for companies involved in logistics and distribution. Improved infrastructure can increase the value of commercial properties located along major transportation routes.

Favorable Real Estate Market Conditions

Arizona’s real estate market has shown strong performance in recent years. The state’s affordable property prices and favorable interest rates make it an enticing prospect for investors. Additionally, the state’s growing demand for commercial spaces has led to favorable lease rates, ensuring a steady income stream for property owners.

Despite the impact of higher interest rates and stricter lending standards, deals are still being made throughout The Valley. Although sales volume is waning from the record high numbers experienced in the past couple of years, there is significant interest from investors in newly constructed, strategically located assets according to AZ Big Media.

Tax Incentives

Arizona offers various tax incentives for commercial real estate investors. These incentives can significantly reduce the financial burden of property ownership, making it a more appealing option. Investors should explore tax credits, deductions, and exemptions available in the state to maximize their returns. According to Frazer Ryan Goldberg and Arnold LLP, “Beginning in 2022, the assessment ratio was reduced from 18% to 17.5%, with further reductions of 0.5% per year until 2025, when it will be set at 16%. This reduction should translate to an approximate 10% savings in commercial property taxes.”

Investing in the Arizona commercial real estate market presents an excellent opportunity for those seeking long-term financial growth and stability. The state’s unique combination of economic growth, population expansion, business-friendly policies, diversified opportunities, and tax benefits makes an appealing destination for companies looking to establish or expand their operations. As the state continues to attract new businesses and residents, commercial properties in Arizona hold significant potential for investors looking to capitalize on the state’s growth.

If you are interested in learning more about the Arizona commercial real estate market in Arizona, feel free to reach out to us at ICRE Investment Team anytime. We’d be happy to help supply you with the information on any relevant properties or markets, alongside any connections in lending, investing, brokerage service or consulting that you might need!