House Bill 2721 is BIG NEWS for multifamily opportunity in Arizona Cities

[Christian Jerman]

I attended my local AZREIA event this Monday and there was some understated, shocking news delivered. This bill, House Bill 2721, is going into effect on January 1, 2026. It's a pretty significant change regarding zoning and how SF zones will be stripped of more regulation than ever before, and they could open the door for serious investment opportunities.

This bill requires any Arizona city with 75,000+ residents to loosen their zoning laws to allow “middle housing” — duplexes, triplexes, fourplexes, and townhomes — in more places, even where they’ve only allowed single-family homes before. Specifically, in a 1 mile radius of the municipality's business district. This involves the historic district so let's be real, some home owners will be pissed. Regulations limiting how many stories a home can have will be lifted. They must allow for at least 2 floors. They cannot enforce commercial codes, they cannot enforce increased parking, and they cannot limit the structure to below 50% of the lot size. This also affects new housing developments over 10 acres. 20% of new housing in these developments must open up for the construction of multifamily units. The city must UPDATE it's zoning, so Phoenix (along with all other cities with 75k+ inhabitants) can set some limits. But if no new zoning rules are established, this new law takes effect and will be allowed in ALL single family zones.

INVESTORS -  If you wanted a multifamily in PHX and you're tired of paying 200k/unit for something with a roof and plumbing as old as the 40's, better get on it! Lot's are going to go, houses are going to go, and soon opportunity to build will start to go away.

WHOLESALERS - Get your water bottles and get on your feet. Start knocking those doors and locking up those bigger lots with hideous homes. They are going to be a gold mine for investors that can build! 

Hopefully we see a restoration of some areas that are in deep need of TLC.

[Patrick O'Sullivan]

This is a massive shift with big implications. Thanks for putting this on everyone’s radar, Christian. HB 2721 could really reshape the infill landscape in Arizona’s urban cores.

For investors, this opens the door to value plays in areas that previously had limited MF potential. Targeting SFH lots within that 1-mile CBD radius could mean getting ahead of the curve, especially in neighborhoods where zoning reform has historically been slow.

I’m particularly curious how cities like Phoenix and Tempe will respond, whether they’ll proactively set new zoning parameters or let the default rules kick in. Either way, there’s a window here for planning, design, and even entitlement prep.

Also worth noting: this may create more competition for infill land, especially from developers looking to build 3 to 4-unit properties with modern designs. It could be a good time to start networking with GCs and architects who understand small-scale multifamily builds.

Looking forward to seeing how this plays out. Feels like one of those rare windows where policy and investment strategy align.