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Arizona’s Adaptive Reuse Surge: What’s Driving It
For years, vacant warehouses, outdated office towers, and underutilized commercial corridors dotted Arizona’s urban core. Now? They’re buzzing again, but not as what they once were. Thanks to a powerful mix of state-level legal reforms and community-driven development incentives, these properties are being reimagined as housing, creative workspaces, art hubs, and more.
This shift, known as adaptive reuse, is transforming how developers, investors, and even first-time property owners approach Arizona real estate.
But this isn’t just about architecture or smart design. The real momentum comes from Arizona’s evolving legal framework, which now removes many of the zoning barriers and procedural roadblocks that once made redevelopment costly or time-consuming.
This article details and clarifies the key updates to our previous article on converting commercial buildings into residential spaces in Arizona. Let’s dive into what you need to know.
What Arizona Law Actually Says About Adaptive Reuse
Arizona clarified its stance with House Bill 2110 and the updated A.R.S. § 9‑462.10: when a project qualifies, cities must allow adaptive reuse or multifamily development without requiring rezoning, conditional use permits, or other public-hearing-based approvals.
So if you own a former storefront and want to convert it into residential lofts, and your property meets the criteria, you may be able to bypass the traditional rezoning process entirely, subject to objective standards.
Under A.R.S. § 9‑462.10, “adaptive reuse” refers to converting an existing building to multifamily use while maintaining some or all of its original structure. But importantly, the law also permits partial or full demolition, depending on the project’s needs. Redevelopment doesn’t have to preserve the entire building to qualify.
Cities with populations over 150,000, including Phoenix and Tucson, are now required to adopt objective standards to permit adaptive reuse projects by right. These standards may include:
- Reduced parking requirements
- Code alternatives for older structures
- Flexibility for materials and setbacks in historic properties
Is Your Commercial Building Eligible? Here’s What to Know
Eligibility depends on several key factors:
- Structure Type
The building must typically be an existing commercial, office, or mixed-use structure located within a qualifying municipality (population 150,000+). Industrial and institutional properties are generally excluded.
- Parcel Size
The parcel must be at least 1 acre but no more than 20 acres in size. Projects on smaller infill lots or very large commercial sites do not qualify under this statute.
- Condition
The building must be economically or functionally obsolete, either in a state of disrepair or with at least 50% vacancy in its leasable space.
- Affordability Set-Aside
The project must set aside at least 10% of total units for moderate- or low-income housing, for a minimum of 20 years. This requirement applies even if the project is not seeking tax credits or other housing subsidies.
When You Don’t Need Rezoning (And When You Still Might)
The biggest legal change was the move toward “by-right” development. Under A.R.S. § 9-462.10, qualifying adaptive reuse and multifamily projects in large cities can bypass traditional rezoning processes, as long as they meet objective criteria and aren’t located in restricted areas.
Restricted areas include:
- Historic districts or buildings designated historic at the local, state, or national level
- Airport influence zones
- Military facility buffer areas
- Tribal lands
Height and Density Rules:
The statute allows projects to build to the highest allowable height and density for multifamily or mixed-use zoning within 1 mile of the site, up to a cap of five stories. However, if the site is directly adjacent to single-family zoning, building height may be limited to two stories within 100 feet of that edge.
Setbacks and Parking:
Cities cannot impose stricter setback requirements than those in the existing zoning code. Adaptive reuse projects may retain nonconforming setbacks, and parking requirements cannot exceed those for standard multifamily residential projects, unless the project is mixed-use.
Adaptive Reuse Starts with a Plan: How to Launch Your Project the Right Way
Whether you’re converting an old department store, warehouse, or office block, successful adaptive reuse starts with strategic planning. Here are key steps to help your project launch on solid legal and financial footing:
Feasibility First
Analyze the market, the physical condition of the property, and how your project aligns with state and local incentive criteria.
Design for Reality
Hire architects and engineers who understand both code compliance and preservation standards, not just one or the other. Early coordination can save months of rework and help frame viable code alternatives when needed.
Permitting and Variances
Cities like Phoenix allow for code equivalencies and waiver requests, but navigating deadlines, documentation, and evidentiary standards can be complex. Legal counsel can help reduce risk and avoid delays.
Your Legal Partner in Arizona Adaptive Reuse and Beyond
Arizona’s legal landscape is finally catching up with how its cities want to grow and that opens the door for developers, property owners, and civic-minded entrepreneurs to breathe new life into the state’s aging building stock.
At Gottlieb Law, we advise clients on commercial projects and can assist with legal strategy, adaptive reuse projects, and development goals.
Need help with a legal issue? Call us at 602-899-8188 or use our Contact Us page to schedule your consultation.