If you’re looking for a crystal ball to peak into the future of real estate development, talking to real estate, land use and zoning attorneys might be the closest you can get to the mythical crystal ball. So, we did just that. Here’s what some of the state’s top attorneys say are the commercial real estate law trends we need to watch in 2025.
MORE NEWS: The Top 100 Lawyers in Arizona for 2024
Stephen W. Anderson, Gammage & Burnham: “The affordable housing crisis will remain a pressing issue in 2025, as rising construction costs and zoning restrictions hinder development. Expect increased legislative efforts to incentivize affordable housing projects and impact zoning laws. Legal practitioners and developers alike must stay attuned to evolving policies that seek to balance community needs with developers’ interests in this crucial area.”
Adam Baugh, partner, Withey Morris Baugh: “Some of the biggest trends to watch in 2025 are housing supply boosts related to new state legislation. For example: Accessory dwelling units, triplex townhomes, infill development in Central Business Districts, etc. All are direct results of 2024 State legislation.”
Hannah Bleam, land use planner, Withey Morris Baugh: “The soaring impact fees at the local level will only further inflate the cost of development and housing.”
Taylor C. Earl, managing partner, Earl & Curley: “The area around TSMC and the deer Valley area will continue to attract industrial, residential, and commercial development. TSMC’s effect as a major catalyst in that area cannot be overstated. This impact will be felt not just in the area in close proximity to TSMC but also up and down the I-17.”
Benjamin L. Gottlieb, founder, Gottlieb Law: “The new commission rules resulting from the National Association of Realtors settlement and the associated impact on the real estate industry is a significant issue to watch out for in 2025. The rules were designed to create greater transparency and competition among real estate agents, buyers and sellers.”
Alex Hayes, attorney, Withey Morris Baugh: “Availability of power capacity to support new advanced manufacturing and data center uses is becoming more scarce. Secure it while you can.”
Rory Juneman, partner, Lazarus & Silvyn: “Optimism in the commercial lending markets will increase if the Fed continues to cut rates. Lower rates should lead to more local development activity, with housing likely leading the way. Inflation has stabilized, but construction costs may not ease if building in southern Arizona increases, which could create headwinds for new development.”
Patrick MacQueen, founder, Medalist Legal: “In 2025, the expansion of accessory dwelling units or casitas as a strategy for increasing affordable housing will be a trend to watch. The Arizona legislature passed a new law allowing for the streamlined approval process for ADUs, enabling homeowners to create rental units on their properties and providing additional affordable housing options. It remains to be seen whether and how homeowners associations will impede or promote the new law.”
Larry Lazarus, partner, Lazarus & Silvyn: “As the housing crisis continues, many creative solutions are being implemented including legislation, public-private partnerships, and development solutions. For example, a company called Z Modular is producing modular multi-family units constructed inside a factory including interior finishes, fixtures and appliances which are then assembled on-site. These can be constructed and move in ready in a fraction of the time it takes for stick built.”
George Pasquel III, planning consultant, Withey Morris Baugh: “Expect to see increased conflict between city efforts to address housing shortage and continued NIMBYism (not in my back yard) against new development.”
Michael J. Pearce, member, Gammage & Burnham: “Water scarcity and management will be critical concerns in real estate development as regulatory scrutiny increases. Legal frameworks governing water rights, potential changes in the assured water supply rules, agriculture to urban use incentives, and mandatory water resource requirements will evolve, requiring developers to navigate complex and changing regulations. In 2025, water-related challenges will be a significant focus for development projects and community planning.”
Wendy R. Riddell, founding and managing partner, Berry Riddell: “In 2025, Arizona’s real estate trend to watch is the diversification of its economy, driven by business-friendly policies and a sunny (hurricane-free!) climate. With growth in healthcare and tech industries, Arizona is attracting new residents, expanding opportunities that include, yet stretch beyond, real estate development and drive the need for more housing.”
Keri Silvyn, partner, Lazarus & Silvyn: “The lack of housing supply will continue to concern homebuyers, realtors, and local governments. Approval of more favorable housing policies and rezonings by local governments may be helped by the growing ‘YIMBY’(Yes in My Backyard) movement. YIMBYs often support residential development in their communities, especially if it provides more affordable, well-priced homes.”
Byron Sarhangian, partner, Snell & Wilmer: “In 2025, a key issue to watch in real estate is the continued growth of industrial spaces driven by onshoring and nearshoring. Companies are rapidly reshoring operations to reduce supply chain risks, increasing demand for warehouses and manufacturing facilities, particularly near transportation hubs and major markets.”
Nick Wood, partner, Snell & Wilmer: “Zoning cases for multifamily apartments should increase in 2025. If the Fed continues a slow, but steady, decrease in the Fed Funds rate, that should have the corresponding effect of creating more opportunities for developers in the capital markets. During the past 18 months, we have seen more and more debt and equity players limit exposure in many sectors of the real estate market, like market rate multi-family housing. That decision has mostly been driven by a combination elevated land values; higher labor and material costs (caused by high inflation); lower rents and higher interest rates.”
