Phoenix has become one of the fastest-growing mixed-use development markets in the Sun Belt. With nearly $2 billion in active mixed-use projects across the metro, Valley Metro light rail driving transit-oriented density, and a population that surpassed 1.65 million in the city proper, investors and developers are finding compelling opportunities to build and acquire live-work-play properties throughout Maricopa County. Securing the right Phoenix mixed-use loans requires understanding the local market dynamics, zoning incentives, and financing structures that make these projects pencil out in Arizona's unique regulatory environment.
Whether you are pursuing a ground-up development near Roosevelt Row, acquiring a retail-over-residential property along the Camelback Corridor, or repositioning a value-add asset near Tempe Town Lake, this guide covers every financing angle specific to the Phoenix mixed-use market.
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Why Is Phoenix a Top Market for Mixed-Use Investment in 2026?
Phoenix has embraced mixed-use development as a core strategy for managing its rapid growth while creating walkable, transit-connected neighborhoods. Several factors make the metro area stand out for mixed-use investors:
Population and economic growth are accelerating. The Greater Phoenix metro added over 80,000 new residents in 2024, making it one of the fastest-growing metros in the country. Major employers in semiconductors (TSMC, Intel), healthcare (Banner Health), and financial services (American Express, Charles Schwab) generate demand for both residential units and ground-floor commercial space.
Billions in mixed-use development are underway. The Metropolitan, an $850 million redevelopment of the former Metrocenter Mall, broke ground in 2026. Thompson Thrift is constructing The Gilmore ($225 million) in Gilbert. Vestar's Legacy Park is a $1 billion master-planned development. Mortenson paid $136 million for 217 acres at Scottsdale Road and Loop 101 for over 5 million square feet of mixed-use space.
Transit-oriented development is reshaping corridors. Valley Metro's 28-mile light rail connects Downtown Phoenix, Tempe, and Mesa. The city's TOD overlay districts encourage higher density within a quarter-mile of rail stations, giving developers entitlement advantages that directly improve project economics.
Relative affordability compared to coastal metros. Phoenix commercial real estate prices remain 30% to 50% below Los Angeles, San Francisco, or Seattle, allowing stronger yields and attracting tenants priced out of higher-cost markets.
Commercial mortgage rates in Arizona start as low as 5.11%, with mixed-use properties typically falling in the 5.5% to 7.5% range. Multifamily occupancy across Greater Phoenix edged up to 93.5% in Q3 2025, a 30-basis-point annual gain despite a record 6,018 new units delivered that quarter.
What Loan Types Work Best for Phoenix Mixed-Use Properties?
Mixed-use properties combine residential and commercial elements under one roof, making them more complex to finance than single-use buildings. The loan structure depends on the property's use ratio, location, and your investment timeline.
Conventional Commercial Mortgages offer terms of 5 to 25 years with fixed or adjustable rates. As of early 2026, rates for stabilized mixed-use properties in Phoenix range from 5.5% to 7.0% with 65% to 75% LTV.
SBA 504 Loans are ideal for owner-occupants who use at least 51% of the building. The program provides up to 90% financing with below-market fixed rates. Phoenix has an active network of SBA-approved CDCs. Explore SBA loan programs for full details.
Bridge Loans serve investors who need to acquire, reposition, or stabilize a mixed-use property before securing permanent financing. A bridge loan provides short-term capital to renovate and lease up value-add mixed-use buildings along Central Avenue or in Midtown Phoenix.
DSCR Loans qualify borrowers based on the property's debt service coverage ratio rather than personal income. Phoenix mixed-use properties with strong rental income can qualify with DSCR ratios as low as 1.20x.
Construction-to-Permanent Loans finance ground-up mixed-use developments from construction through stabilization in a single close.
Value-Add Financing combines acquisition and renovation capital for investors repositioning older properties along established Phoenix corridors. Learn more about value-add strategies.
How Does Transit-Oriented Development Affect Mixed-Use Financing in Phoenix?
Valley Metro's light rail system has become the single most important driver of mixed-use development in the Phoenix metro. The 28-mile system connects North Phoenix, Downtown, Tempe, and Mesa with approximately 50,000 average weekday boardings. Properties near stations command rental premiums and qualify for density bonuses that fundamentally change project economics.
Phoenix's TOD overlay districts provide specific incentives for mixed-use projects near rail stations:
- Increased density allowances permitting more residential units per acre than base zoning
- Reduced parking requirements cutting structured parking costs by hundreds of thousands of dollars
- Streamlined entitlement processes reducing predevelopment timelines
- Height bonuses in certain station-area plans allowing taller buildings
For financing, transit-oriented mixed-use projects offer advantages lenders recognize. Properties within a quarter-mile of light rail stations command 10% to 20% rental premiums, supporting larger loan amounts. Structured parking costs $25,000 to $50,000 per space in Phoenix, so TOD-area parking reductions meaningfully improve loan-to-cost ratios. National investors and REITs actively seeking transit-oriented assets create strong exit options for bridge loan borrowers.
The city recently announced a multifamily mixed-use development at 19th Avenue and Dunlap, directly on the light rail line. Manzana, an eight-story mixed-use building designed by architect Lev Libeskind, is bringing 68 residential units and 10,000 square feet of retail to Roosevelt Row near the Roosevelt/Central station.
What Are Current Mixed-Use Loan Rates and Terms in Phoenix?
Loan rates for mixed-use properties in Phoenix vary based on property type, leverage, borrower strength, and market conditions. As of early 2026, here is a snapshot of typical terms:
With many rates in the 5.5% to 7.0% range for stabilized properties, cash flow analysis is more critical than ever. Borrowers should run projections using our commercial mortgage calculator to ensure positive leverage on their Phoenix mixed-use investment.
Lenders evaluating mixed-use properties in Phoenix pay close attention to the residential-to-commercial ratio. Properties with 70% or more residential use generally qualify for more favorable residential lending terms, while those with a larger commercial component face stricter underwriting. The ideal mix for most Phoenix mixed-use buildings falls between 65% and 80% residential, with ground-floor retail, restaurant, or office space making up the balance.
Arizona's regulatory environment is generally more business-friendly than coastal states, which translates to faster permitting, lower construction costs, and shorter development timelines. These factors make Phoenix mixed-use projects less risky from a lender's perspective, which can result in better terms compared to similar projects in California or the Pacific Northwest.
Which Phoenix Neighborhoods Offer the Best Mixed-Use Opportunities?
Phoenix's sprawling metro offers diverse mixed-use investment opportunities across distinct submarkets. Location selection directly impacts financing terms, rental income potential, and exit strategy. Here is a neighborhood-by-neighborhood breakdown:
Downtown Phoenix and Roosevelt Row Roosevelt Row has become the epicenter of mixed-use development with projects like Manzana (68 units, 10,000 SF retail) and EcoPhx (70 apartments with ground-floor retail). Around ten high-rise mixed-use buildings are expected downtown, including PALMTower at Arizona Center. Central Station is being redesigned with retail, office, and two residential towers. Cap rates range from 5.0% to 6.0%.
Tempe Town Lake Tempe's lakefront district draws institutional mixed-use investment driven by ASU's 80,000-student enrollment and strong light rail connectivity. The area features the highest residential rents in the East Valley. ASU's car-free neighborhood concept is pioneering transit-first living for 1,000 residents.
Old Town Scottsdale Scottsdale's entertainment district offers a premium mixed-use environment with ground-floor restaurants and galleries supporting luxury residential above. Financing reflects higher property values, with correspondingly higher loan amounts.
Camelback Corridor Stretching along Camelback Road from Central Avenue to Scottsdale Road, this corridor is evolving from single-use office and retail to mixed-use infill. Proximity to Biltmore Fashion Park and strong demographics make it attractive for residential-over-retail projects.
Desert Ridge and North Phoenix CityNorth at Desert Ridge is planned for over 5.5 million square feet across 144 acres. Mortenson's 217-acre Scottsdale Road development will deliver over 5 million square feet. A 68-acre project at I-17 and Peoria Avenue includes 1,000 housing units and 115,000 square feet of retail.
Mesa Riverview and East Valley Mesa Riverview at Dobson Road and Loop 101 offers over 1.1 million square feet of mixed-use space. The Gilmore, Thompson Thrift's $225 million development in Gilbert, reflects the East Valley's growing appeal for live-work-play communities.
How Should You Underwrite a Mixed-Use Property in Phoenix?
Underwriting a mixed-use property in Phoenix requires evaluating both the residential and commercial components separately, then combining them into a blended analysis. Lenders focus on several key metrics:
Debt Service Coverage Ratio (DSCR): Most lenders require a minimum DSCR of 1.20x to 1.25x for stabilized mixed-use properties. For value-add properties, lenders may underwrite to a projected DSCR upon stabilization.
Vacancy Assumptions: Lenders typically assume 5% to 7% vacancy for residential units and 10% to 15% for commercial space. Retail vacancy across Phoenix remains stable at approximately 6.5%, while multifamily occupancy sits at 93.5%.
Expense Ratios: Phoenix mixed-use properties carry operating expenses ranging from 30% to 40% of effective gross income. Lower property taxes (0.6% to 0.8% vs. 2.0%+ in Texas), minimal disaster insurance costs, and efficient utility expenses (except summer cooling at $100 to $200 per unit monthly) contribute to favorable ratios.
Commercial Tenant Quality: Ground-floor tenants with national credit strengthen underwriting. Lenders prefer leases with at least 5 years remaining and annual rent escalations of 2% to 3%.
Phoenix-Specific Advantages: No rent control gives investors full flexibility on rents. Rapid population growth supports consistent absorption of new supply.
What Zoning and Business Climate Advantages Affect Phoenix Mixed-Use Loans?
Phoenix's zoning framework and Arizona's pro-business environment create a favorable landscape for mixed-use financing. Understanding these factors directly impacts your loan terms and project feasibility.
Planned Unit Development (PUD) Zoning is the most common path for mixed-use projects in Phoenix, offering flexibility in mixing residential and commercial uses. Urban Village Overlay Districts cover much of central Phoenix and encourage higher-density mixed-use development. The Metropolitan's $850 million redevelopment is proceeding under the Alhambra Village plan. Infill Incentive Districts offer reduced parking, increased height limits, and expedited review for qualifying projects on previously developed land.
From a financing perspective, fully entitled mixed-use projects with approved PUD or infill incentive district status receive significantly better loan terms than projects still in the entitlement pipeline. If you are acquiring a site that requires rezoning, expect lenders to require a larger equity contribution.
Arizona's regulatory advantages further strengthen mixed-use project economics:
- No rent control: Arizona prohibits municipal rent control ordinances, giving lenders confidence in income growth projections
- Lower property taxes: Maricopa County rates (0.6% to 0.8%) are roughly one-third of Cook County or Harris County
- Faster permitting: Projects that take 2 to 3 years in Los Angeles can be approved in 6 to 12 months in Phoenix
- Right-to-work state: Lower construction labor costs improve loan-to-cost ratios for ground-up developments
- Proposition 207: Requires municipalities to compensate owners if regulations reduce property value, creating regulatory stability
What Are the Biggest Risks to Mixed-Use Projects in Phoenix?
Every market has risk factors that lenders and investors must evaluate. Phoenix mixed-use projects face several specific challenges:
Heat and climate considerations. Phoenix averages over 100 days per year above 100 degrees Fahrenheit. Mixed-use projects must account for shaded walkways, enhanced HVAC systems, and higher cooling costs. Ground-floor retail that depends on foot traffic can see seasonal dips during summer months. Lenders may apply higher expense assumptions for properties without adequate heat mitigation features.
Water supply concerns. Arizona's long-term water supply has drawn national attention. While Phoenix has secured water rights and infrastructure investments that position the city well for the next several decades, lenders increasingly ask about water availability when underwriting large-scale mixed-use developments, particularly in outer suburban locations.
Oversupply risk in certain submarkets. The volume of mixed-use development in Tempe and parts of Downtown Phoenix has raised absorption concerns. A record 6,018 multifamily units were delivered in Q3 2025 alone. Lenders may require higher pre-leasing thresholds for construction loans in submarkets with heavy pipeline activity.
Interest rate sensitivity. With commercial mortgage rates ranging from 5.5% to 7.5%, small rate movements have meaningful impacts on debt service coverage. Borrowers should stress-test their pro formas at rates 0.5% to 1.0% above current levels to ensure the project remains viable under less favorable conditions.
What Steps Should You Take to Finance Your Phoenix Mixed-Use Project?
Financing a mixed-use property in Phoenix requires careful preparation and a strategic approach. Follow this process to position your project for the best possible terms:
Step 1: Evaluate Location and Zoning. Before making an offer, confirm the property's zoning supports your intended mixed-use program. Check proximity to Valley Metro light rail stations, infill incentive district eligibility, and urban village overlay provisions. These factors directly affect density, parking requirements, and lender appetite.
Step 2: Assemble Your Pro Forma. Build a detailed development budget and operating pro forma that accounts for Phoenix-specific costs including enhanced HVAC and cooling systems, heat mitigation features for outdoor areas, Maricopa County property taxes, and seasonal retail revenue variations. Use the commercial mortgage calculator to test different financing scenarios.
Step 3: Choose the Right Loan Product. Match your financing to your investment strategy. Stabilized acquisitions may work best with conventional commercial mortgages or DSCR loans. Owner-occupied properties benefit from SBA 504 financing. Value-add projects require bridge loans before transitioning to permanent financing. Ground-up developments need construction-to-permanent loans.
Step 4: Prepare Your Loan Package. Lenders financing Phoenix mixed-use properties will require a completed loan application, personal financial statements, property appraisal, environmental Phase I assessment, rent rolls and lease abstracts, historical operating statements (for existing properties), and a development budget with construction timeline (for new construction).
Step 5: Secure Approvals and Close. Work with a lender experienced in Phoenix mixed-use financing who understands Arizona's regulatory environment, TOD incentives, and the local market dynamics that affect underwriting. An experienced lender can often identify cost savings and structural advantages that improve your overall deal economics.
Contact our team today to discuss your Phoenix mixed-use financing needs. We specialize in structuring loans for transit-oriented and infill mixed-use developments across the Greater Phoenix metro.
What Emerging Trends Will Shape Phoenix Mixed-Use Lending Through 2026?
The Phoenix mixed-use market is evolving rapidly. Several trends will influence financing strategies through 2026 and beyond:
Mega-project delivery creates neighborhood transformation. The Metropolitan ($850M), Mortenson's Scottsdale Road development (5M+ SF), and Vestar's Legacy Park ($1B) will reshape corridors over the next decade, creating spillover demand for smaller mixed-use investments nearby.
Light rail expansion drives development corridors. Despite the recent City Council decision to re-evaluate the Capitol Extension, Valley Metro continues exploring high-capacity transit options for west Phoenix along Indian School Road. Each new station creates a development zone with entitlement and financing advantages.
Semiconductor workforce housing demand. TSMC's North Phoenix fabrication complex is creating demand for thousands of housing units. Mixed-use developments integrating workforce housing with retail near these campuses attract both developer interest and lender enthusiasm.
Adaptive reuse opportunities are growing. The Metropolitan's transformation of the former Metrocenter Mall is the most prominent example, but smaller-scale adaptive reuse projects are emerging as older retail centers and office buildings become obsolete.
Sustainability incentives. Some lenders offer green financing incentives for energy-efficient mixed-use buildings, including rate reductions of 10 to 25 basis points for LEED or Energy Star certifications.
Ready to explore mixed-use financing in Phoenix? Our team can help you identify the right loan structure for your project, whether you are acquiring a stabilized asset, pursuing a transit-oriented development, or converting an underperforming property to mixed use.
Frequently Asked Questions About Mixed-Use Loans in Phoenix
What is the minimum down payment for a mixed-use property loan in Phoenix?
Down payment requirements depend on the loan type and property characteristics. Conventional commercial loans typically require 25% to 35% down (65% to 75% LTV). SBA 504 loans can go as high as 90% LTV, requiring only 10% down for owner-occupied mixed-use properties. Bridge loans range from 20% to 35% down depending on the lender and project risk profile.
Can I use a residential loan for a mixed-use property in Phoenix?
In some cases, yes. If the property has four or fewer residential units and the commercial space occupies less than 25% to 30% of the total square footage, some residential lenders will finance the purchase. However, properties with a larger commercial component or more than four units require commercial financing, including DSCR or conventional commercial loan structures.
How does Valley Metro light rail proximity affect my loan approval?
Light rail proximity generally helps your loan approval. Lenders recognize that transit-oriented mixed-use properties command higher rents, experience lower vacancy, and attract stronger tenants. Properties within Phoenix's TOD overlay districts may qualify for reduced parking requirements, which lowers construction costs and improves loan-to-cost ratios. Lenders experienced with Phoenix mixed-use projects will factor these advantages into their underwriting.
What DSCR do lenders require for Phoenix mixed-use properties?
Most lenders require a debt service coverage ratio between 1.20x and 1.25x for stabilized mixed-use properties in Phoenix. Properties with strong commercial tenants, high residential occupancy, and light rail proximity may qualify at the lower end of this range. Properties with shorter commercial leases or higher vacancy may face requirements of 1.25x to 1.30x.
How do Phoenix mixed-use loans compare to other Sun Belt markets?
Phoenix generally offers more favorable mixed-use financing terms than most Sun Belt competitors. Lower property taxes than Texas markets (Houston, Dallas, San Antonio), no rent control restrictions unlike some California markets, and faster permitting than coastal cities all contribute to stronger project economics. Lenders view Phoenix as a growth market with manageable risk, which translates to competitive rates and terms.
How long does it take to close a mixed-use loan in Phoenix?
Timelines vary by loan type. Bridge loans can close in as little as 2 to 4 weeks. Conventional commercial mortgages typically take 45 to 75 days. SBA 504 loans require 60 to 120 days due to CDC involvement. Construction loans may take 60 to 90 days to close but require completed entitlements. Phoenix's relatively efficient permitting process means overall project timelines from acquisition to stabilization are often shorter than comparable projects in other major metros. Get in touch with our team to get started.