Phoenix Commercial Refinance Loans: Rate & Term Options [2026 Guide]

Phoenix is one of the fastest-growing commercial real estate markets in the country, with a population surging past 1.8 million residents and approximately 200 new people arriving every day. That growth has fueled billions in CRE investment, but it has also created a massive wave of loan maturities that property owners must now navigate. With over $936 billion in commercial real estate loans maturing nationally in 2026 and Arizona properties well represented in that figure, understanding your commercial refinance options has never been more important.

Whether you own a multifamily complex in Tempe, an industrial warehouse in the West Valley, or an office building in downtown Phoenix, this guide covers the rates, terms, and strategies available for refinancing commercial property in the Phoenix metropolitan area.

What Are the Current Commercial Refinance Rates in Phoenix?

As of early 2026, Phoenix commercial mortgage rates start as low as 5.17% for well-qualified borrowers with stabilized properties. However, the rate you receive depends on several factors specific to your property and financial profile.

Phoenix borrowers benefit from the metro's strong economic fundamentals. The CBRE Lending Momentum Index rose 112% year-over-year in Q3 2025, marking the highest lending activity since 2018. That increased competition among lenders has helped push rates down from the peaks seen in 2023 and 2024, when the prime rate exceeded 8%. The prime rate has since settled to 6.75% as of late 2025.

For Phoenix specifically, rate ranges depend on property type and loan structure:

• Multifamily permanent loans: 5.10% to 6.50%
• Industrial refinance: 5.25% to 6.75%
• Retail and mixed-use: 5.50% to 7.25%
• Office refinance: 6.00% to 8.00%
• Hospitality: 6.50% to 8.50%

Agency lenders like Fannie Mae and Freddie Mac continue to offer the most competitive multifamily rates. The Federal Housing Finance Agency increased multifamily loan purchase caps to $88 billion each for 2026, a 20% increase over 2025, which provides additional liquidity for Phoenix apartment refinancing.

Who Qualifies for a Commercial Refinance in Phoenix?

Qualification for a commercial refinance in Phoenix depends on both the borrower's financial strength and the property's performance. Lenders evaluate several key metrics when underwriting a refinance request.

The most critical factor is the debt service coverage ratio (DSCR). Your property's net operating income must exceed the proposed mortgage payment by at least 20% to 45%, translating to a minimum DSCR of 1.20 to 1.45 depending on the lender and property type. Multifamily properties typically require a lower DSCR threshold, while office and hospitality assets need stronger coverage.

Loan-to-value ratios in Phoenix generally cap at 75% for commercial properties and up to 80% for multifamily. SBA-backed refinances can reach as high as 90% LTV for owner-occupied commercial properties.

Borrower requirements include:

• Net worth: Typically equal to or greater than the loan amount
• Liquidity: 6 to 12 months of debt service reserves
• Credit score: 680 minimum for conventional, 660 for some bridge and DSCR programs
• Experience: Lenders prefer borrowers with at least 2 to 3 years of property management experience

Why Are So Many Phoenix Property Owners Refinancing Right Now?

The answer lies in a convergence of market forces that are unique to this moment in the Phoenix commercial real estate cycle.

First, the maturity wall is here. Between 2024 and 2026, more than $1.5 trillion in commercial real estate loans nationally are set to mature. Many Phoenix borrowers who locked in financing at 3% to 4% during the low-rate era of 2019 to 2022 are now facing refinance rates that could be nearly double their original terms. A loan originated at 3.5% in 2020 could refinance at 6.5% to 7% today, significantly impacting cash flow.

Second, property values in certain Phoenix sectors have shifted. The office vacancy rate downtown averaged 23% in Q2 2025 and closed the year at 26.5% in Q4 2025. That depreciation means some office borrowers face cash-in refinances where they need to bring additional equity to the table.

Third, approximately $180 billion in floating-rate multifamily loans nationally are expected to reset by 2026. Phoenix, which saw 4,460 new multifamily unit deliveries as one of the Sun Belt's most active markets, has a significant share of operators holding floating-rate or short-term bridge debt that now requires permanent financing.

What Refinance Strategies Work Best for Phoenix Multifamily Properties?

Phoenix's multifamily sector remains the strongest candidate for favorable refinance terms, though the market is evolving in ways that demand strategic thinking.

Cap rates for Class A multifamily properties in Phoenix held steady around 4.74% in Q3 2025, while Class B assets traded at 4.92% and Class C at 5.38%. With year-to-date multifamily sales reaching $3.2 billion (up roughly $250 million from 2024), investor appetite remains strong, which supports property valuations during the refinance appraisal process.

The good news for multifamily owners is that new construction completions are projected to fall by nearly 50% across the Phoenix market in 2026. As excess inventory from the building boom gets absorbed over the next 12 to 18 months, existing properties face less competition, positioning fundamentals to strengthen.

Top multifamily refinance strategies for Phoenix include:

• Agency refinance through Fannie Mae or Freddie Mac for stabilized properties with 90%+ occupancy, offering the lowest rates and longest terms
• Cash-out refinance to pull equity from properties acquired during the 2020 to 2022 buying cycle that have appreciated
• Bridge-to-permanent conversion for value-add projects that have completed renovations and achieved stabilized occupancy
• Interest rate buydown using reserve funds to secure a lower permanent rate and improve long-term cash flow

For properties with strong occupancy performance, the refinance process typically takes 45 to 90 days from application to closing.

How Does Industrial Property Refinancing Work in Phoenix?

Phoenix has established itself as the second-fastest growing industrial market in the United States, and that momentum creates compelling refinance opportunities.

Industrial cap rates in Phoenix averaged in the mid- to high-5% range for stabilized assets in Q3 2025, below the national average of 7.3%. The market absorbed 4.4 million square feet in Q4 2025 alone, driven by logistics, retail-oriented occupiers, and advanced manufacturing users. Approximately $5.4 billion in industrial assets traded over the trailing 12 months.

However, the market is working through a period of elevated vacancy, which reached 12.4% in Q4 2025 after years of aggressive development. This impacts refinance underwriting for properties that are not fully leased.

For industrial property owners in Phoenix considering a refinance:

• Fully leased properties with investment-grade tenants can access the most competitive CMBS and life insurance company rates, often 50 to 75 basis points below standard commercial rates
• Properties with vacancy may benefit from a short-term bridge loan to provide time for lease-up before pursuing permanent financing
• Owner-occupied industrial facilities can leverage SBA 504 refinancing with up to 90% LTV and below-market fixed rates for 10 to 25 year terms

Use our commercial mortgage calculator to model different refinance scenarios based on your property's current NOI and target loan amount.

What Options Exist for Phoenix Office Property Refinancing?

Office property refinancing in Phoenix requires a different approach given the sector's ongoing challenges. With office vacancy at 26.5% metro-wide as of Q4 2025, lenders are underwriting office refinances with heightened scrutiny.

Despite the headwinds, there are pathways forward for Phoenix office owners. The key is matching the right financing strategy to the property's current position and future potential.

For stabilized Class A office properties with strong occupancy (above 85%), conventional refinancing remains available through banks and CMBS lenders, though expect higher rates (6.00% to 8.00%) and lower leverage (60% to 65% LTV) compared to pre-pandemic terms.

For underperforming office properties, two creative strategies are gaining traction in Phoenix:

Office-to-residential conversion financing is becoming a significant opportunity. Phoenix ranks as the nation's 11th largest market for office-to-apartment conversions, with 1,634 units in the pipeline and a 19% year-over-year increase in conversion activity. Governor Katie Hobbs signed bipartisan legislation in April 2025 creating clear standards for adaptive reuse projects, requiring at least 10% of new units to be designated for low- or moderate-income residents. The Caliber Canyon Village project, converting two distressed office buildings into 376 apartments, received unanimous city council approval with first deliveries expected in late 2026.

Bridge refinancing with a repositioning plan allows owners to access short-term capital while executing a leasing strategy or conversion plan. This can provide 12 to 36 months of runway with interest-only payments.

What Is the Step-by-Step Process for Refinancing Commercial Property in Phoenix?

Refinancing commercial property in Phoenix follows a structured process that typically spans 45 to 120 days depending on the complexity of the transaction and the lending channel.

Understanding each phase helps you prepare the right documentation and avoid delays that could jeopardize your rate lock or maturity deadline.

Gathering your documentation before beginning the process is critical. Lenders will request operating statements, rent rolls, tax returns, property condition reports, and environmental assessments. For Phoenix properties, having a recent appraisal that accounts for the metro's population growth and economic trajectory can support a stronger valuation.

How Does Sun Belt Cap Rate Compression Affect Phoenix Refinance Values?

Cap rate compression across Sun Belt markets has been a double-edged sword for Phoenix property owners considering a refinance.

On the positive side, compressed cap rates mean higher property valuations. Multifamily cap rates in Phoenix compressed 7 basis points during Q1 2025, with Class A properties trading near or below the 4.74% threshold. Industrial cap rates at 5.5% to 6.7% remain well below the national 7.3% average. These lower cap rates translate to higher appraised values, which supports larger loan proceeds during a refinance.

On the challenging side, cap rate compression also means tighter yields. Borrowers refinancing at today's rates (5.17% to 7.00%) against properties valued at compressed cap rates (4.74% to 6.70%) may find that debt yields are thin. Many lenders now require minimum debt yields of 8% to 10%, which can limit proceeds even when property values are high.

The practical impact for Phoenix borrowers:

• Properties acquired in 2020 to 2022 at higher cap rates may have appreciated significantly, enabling cash-out refinancing
• Properties acquired recently at compressed cap rates may face tighter leverage constraints
• Rising NOI through rent growth and expense management is the most reliable way to improve refinance outcomes regardless of cap rate environment

What Should Phoenix Borrowers Know About Rate Resets on 2020 to 2022 Acquisitions?

Properties acquired during the 2020 to 2022 window represent perhaps the largest cohort of Phoenix commercial assets now facing refinance decisions. Many of these acquisitions were financed with 3-year or 5-year bridge loans, floating-rate debt, or short-term bank financing that is now maturing.

The math can be stark. A Phoenix multifamily property acquired in 2021 with a $10 million loan at 3.75% has an annual debt service of approximately $555,600 on a 30-year amortization. Refinancing that same balance at 6.50% increases annual debt service to roughly $758,400, a jump of $202,800 per year or 36.5%.

For properties that have seen rent growth and NOI increases over the past 3 to 5 years, the higher debt service may be manageable. Phoenix's fundamentals support this: population growth of 200 people per day, $999 million in CRE investment sales through Q1 2025 alone, and the status as a top-tier Sun Belt market for institutional capital.

However, for properties that have not achieved the projected rent growth, especially those in submarkets with elevated supply, the rate reset can create a cash flow shortfall. In those cases, consider:

• Requesting an interest-only period (1 to 3 years) to reduce near-term debt service
• Exploring a rate buydown structure where upfront fees reduce the permanent rate
• Seeking a partial-term interest rate cap to provide protection against further rate increases
• Bringing additional equity or arranging mezzanine financing to reduce the senior loan amount and improve DSCR

What Are Common Mistakes to Avoid When Refinancing in Phoenix?

Phoenix's dynamic market creates opportunities, but it also presents pitfalls that can derail a commercial refinance. Being aware of these common mistakes helps borrowers navigate the process successfully.

Starting too late. Many borrowers wait until 60 to 90 days before their loan maturity to begin the refinance process. Given that commercial refinances can take 45 to 120 days, this leaves virtually no margin for delays. Best practice is to begin exploring options 6 to 12 months before maturity.

Overlooking prepayment penalties. CMBS loans and some bank loans carry significant prepayment penalties including yield maintenance and defeasance provisions. These costs can run 3% to 10% of the loan balance and must be factored into the refinance analysis.

Ignoring environmental requirements. Arizona's environmental regulations require Phase I Environmental Site Assessments for most commercial transactions. For industrial properties in Phoenix, Phase II assessments may also be required. Budget 4 to 6 weeks for environmental due diligence.

Underestimating appraisal risk. In a market where office vacancy exceeds 26% and industrial vacancy has risen to 12.4%, appraisals may come in lower than expected. Order a preliminary broker opinion of value before committing to a refinance to understand your property's current market position.

Failing to shop multiple lenders. The spread between the best and worst refinance offers in Phoenix can exceed 100 basis points. Working with a lending team that has relationships across banks, agencies, CMBS lenders, and private capital sources ensures you access the full range of options.

Ready to explore your refinance options? Contact our team to discuss your Phoenix property and receive a customized rate quote.

Frequently Asked Questions About Phoenix Commercial Refinancing

What is the minimum loan amount for a commercial refinance in Phoenix?

Most conventional commercial lenders in Phoenix have minimum loan amounts of $500,000 to $1 million. SBA 504 refinances are available for loans as small as $125,000. For larger properties, agency lenders like Fannie Mae and Freddie Mac typically require minimums of $1 million to $3 million for multifamily refinances.

Can I do a cash-out refinance on my Phoenix commercial property?

Yes, cash-out refinancing is available for Phoenix commercial properties. Most lenders allow cash-out proceeds up to 65% to 75% LTV, depending on property type and performance. Multifamily properties with strong occupancy and NOI growth are the best candidates for maximum cash-out proceeds. Use the equity you pull out for capital improvements, acquisitions, or portfolio expansion.

How long does a commercial refinance take in Phoenix?

Timelines vary by lender type. Bank loans typically close in 45 to 60 days. Agency loans (Fannie Mae, Freddie Mac) take 60 to 90 days. CMBS loans require 75 to 120 days due to additional securitization requirements. Bridge loans can close in as little as 14 to 30 days for time-sensitive maturities.

What if my Phoenix property's value has declined since I purchased it?

If your property has lost value, you may face a cash-in refinance where you need to contribute additional equity. Alternatives include negotiating a loan modification with your current lender, securing mezzanine financing to fill the gap, or obtaining a bridge loan that provides time for the property to recover value through improved operations.

Are there special refinance programs for Phoenix office buildings being converted to residential?

Yes, several lending channels support office-to-residential conversion projects in Phoenix. HUD 221(d)(4) loans provide long-term, non-recourse financing for substantial rehabilitation projects. Bridge lenders offer conversion-specific financing with interest reserves. Arizona's 2025 adaptive reuse legislation has also attracted new capital to this sector, with lenders offering specialized programs for properties meeting the state's affordability requirements.

What DSCR do I need to refinance my Phoenix commercial property?

Minimum DSCR requirements vary by property type. Multifamily properties typically need a DSCR of 1.20 to 1.25. Retail and industrial properties require 1.25 to 1.35. Office properties, given current market conditions, may need 1.35 to 1.45. Some DSCR loan programs offer more flexible qualification criteria for borrowers with strong balance sheets.