Opening a brick-and-mortar location is one of the most exciting milestones for a small business owner—but it’s also one of the most expensive and complex. Whether you’re launching a boutique, café, salon, service business, or professional office, understanding the true full cost of opening a physical location in the Phoenix metro can make the difference between a confident launch and a stressful misstep.
Costs vary by location (Scottsdale vs. West Valley), by property type (retail vs. office vs. flex), and by the landlord’s approach (TI, NNN charges, build-out standards). This guide breaks down what Arizona business owners should expect so you can budget accurately and launch with clarity.
Lease Costs: More Than Just Base Rent
Your lease structure determines much of your ongoing risk and overhead.
Base Rent
- Central Phoenix: $26–$36/sf/yr
- Chandler/Gilbert: $24–$32/sf/yr
- Scottsdale: $32–$48/sf/yr (higher for premium corridors)
- West Valley: $18–$26/sf/yr
NNN Charges (CAM, Taxes, Insurance)
In many retail centers, expect $6.00–$9.50/sf/yr.
Rising insurance and tax assessments have pushed CAM fees up—in some centers by double-digit percentages.
Deposits + First Month
Typical upfront cash:
- First month’s rent
- Security deposit: 1–2 months
- Personal guarantee (common for small businesses)
Pro Tip (Arizona-Specific):
Many Phoenix landlords now require deposits plus prepaid NNN estimates. Build this into your launch cash.
Build-Out & Improvements (TI)
This is where costs swing massively.
Two Scenarios:
A) Second-Generation Space (already built for a similar use)
Most cost-effective path.
Typical expenses:
- Minor demo: $3k–$10k
- New flooring/paint: $5–$25/sf
- Lighting upgrades: $3k–$12k
- Signage: $3k–$15k
Estimated total: $20k–$75k depending on condition.
B) First-Generation Space (shell condition)
This is where owners are surprised.
Shell build-out ranges:
- Basic retail: $60–$120/sf
- Food/restaurant: $150–$350/sf
- Medical office: $100–$250/sf
Estimated total: $80k–$400k+ depending on complexity.
Tenant Improvement (TI) Allowances
In Phoenix, TI allowances now commonly range:
- Retail: $10–$40/sf
- Office: $15–$55/sf
- Restaurant: Highly variable—some landlords offer $0, others $50–$100/sf for strong operators.
Note: TI allowances are rarely free money. They’re baked into the long-term economics of the deal—often higher rent or longer terms.
Permits, Plans & Professional Fees
Budgeting for city and professional requirements is essential.
Architectural & Engineer Drawings
- $5k–$40k depending on scope
- Restaurants and medical spaces require more complex plans
Permits (City of Phoenix, Tempe, Scottsdale, etc.)
- Building permit: $1k–$8k
- Mechanical/electrical/plumbing permits: $1k–$5k
- Fire inspections: $500–$3k
- Health department (restaurants): $1k–$3k
Timeline Consideration:
Submittal → review → resubmittal can take 4–12 weeks depending on city and complexity.
Equipment & Furnishings
This varies widely by industry, but typical ranges look like:
Retail/Boutique
- Fixtures & shelving: $5k–$25k
- POS systems: $1k–$4k
- Display tables/racks: $2k–$10k
Service Businesses (salons, fitness, wellness)
Chairs/tables/machines: $10k–$50k+
Restaurants
- Kitchen equipment: $40k–$200k+
- Refrigeration & prep: $10k–$50k
- Dining furniture: $10k–$40k
Professional Office
- Desks & conference tables: $5k–$25k
- Computers/phones: $3k–$10k
- Lobby furniture: $3k–$20k
Initial Inventory & Supplies
Expenses vary significantly by industry.
- Retail: $10k–$50k+
- Coffee shops: $5k–$20k for supply stock
- Restaurants: $8k–$25k for initial food/beverage
- Office: $1k–$5k for admin supplies
This category is frequently overlooked during initial planning.
Insurance, Utilities & Operating Expenses
Insurance
Commercial liability in Arizona:
- Small retail: $700–$2,500/year
- Restaurant: $3,000–$8,000/year
- Medical/professional: highly variable
Property insurance is typically included in NNN charges—but you still need your own liability coverage.
Utilities
Depends heavily on HVAC usage:
- Retail: $300–$800/mo
- Restaurants: $700–$2,000/mo
- Office: $200–$600/mo
Trash, internet, janitorial
- Trash: $80–$300/mo
- Internet: $75–$250/mo
- Janitorial: $150–$600/mo
Marketing & Launch Costs
Successful openings in Phoenix often include:
- Branding & logo work: $500–$5,000
- Website: $1,500–$7,500 (or more for custom)
- Photos & videos: $500–$3,000
- Digital ads: $1,000–$5,000 for launch month
- Local influencer campaigns (becoming common): $300–$2,000 per partnership
Working Capital Cushion
Most small businesses underestimate the time to reach stable revenue.
Arizona businesses should plan for:
- 2–6 months of operating expenses as a cushion
- Extra buffer for summer slowdown (Phoenix retail + restaurant seasonality is very real)
This may be the most important part of your budget.
Sample Total Budget Ranges
Second-Generation Retail User:
$35,000 – $150,000
First-Generation Retail User:
$120,000 – $300,000+
Restaurant:
$150,000 – $500,000+
Professional Office:
$25,000 – $95,000
Each business and business type is different, but these ranges reflect real-world Phoenix conditions.
Final Thoughts
Opening a brick-and-mortar business in Phoenix is one of the most powerful ways to grow your brand, serve customers face-to-face, and build long-term equity. But launching successfully requires more than just signing a lease—you need a full understanding of construction costs, fees, cash-flow needs, and local market dynamics.
If you’re evaluating potential locations, build-out options, or need help estimating full launch costs anywhere in the Phoenix metro, DTD Realty can help.
DTD Realty — Do The Deal.
Driven. Trusted. Dependable.
📞 602.702.3601
🌐 https://www.dtdrealty.com
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