Phoenix Removes Retail Restrictions, Allows Citywide Accessory Dwelling Units

Phoenix City Council voted 6-3 on July 9 to approve revised zoning ordinances that eliminate single-use residential restrictions in 12 of the city's 15 planning districts and authorise accessory dwelling units on any residential lot. The changes take effect 1 August 2026. Residents renting apartments, small business owners seeking affordable storefronts, and property owners considering adding secondary units face the most direct consequences from the policy shift.

The council's Planning Committee spent 14 months reviewing the existing zoning code, citing a 2024 housing affordability study commissioned by the city that found median rents in central Phoenix had risen 34 percent in five years. Planners noted that current zoning rules prohibit corner stores, cafes, and service businesses from operating on residential blocks, forcing residents to drive for basic goods. The new code permits mixed-use buildings up to four storeys in residential zones, provided ground-floor commercial space remains under 5,000 square feet per property.

Who Wins, Who Needs to Adapt

For renters, the policy creates two competing pressures. Property developers say the looser zoning will incentivise new construction: City Councillor Martin Ruiz stated in the council minutes that consultants project 1,200 to 1,800 new housing units over eight years in areas newly zoned for mixed-use development. Rental housing advocates, however, caution that new units typically command market rates. The city's development impact fee structure will require that 15 percent of units in new mixed-use buildings be priced at or below 80 percent of area median income, a requirement unchanged from previous policy.

Small business owners gain direct benefit. A grocer, bakery, or medical clinic can now open on a residential block without seeking individual zoning variances, a process that previously cost between $3,500 and $8,000 in application and legal fees and took four to six months. The Chamber of Commerce estimated in May that approximately 60 small business applications are currently stalled in the variance queue; those projects may now proceed under the new code.

Property owners with detached homes or townhouses in single-family zones can now add accessory dwelling units (small secondary homes on the same lot) without a conditional use permit. The city's housing office expects this provision alone could create 400 to 600 rental units over three years. A homeowner renting out a detached unit faces no new licensing requirement but must register the property with the city housing department within 90 days of occupancy.

Implementation and What Residents Should Watch

The Planning Department has 60 days to issue updated zoning maps and amend the city's development code. Building permit processing is expected to accelerate once the maps are public; the city projects application review time will drop from 12 weeks to 8 weeks for projects complying with new permitted uses. Residents concerned about neighbourhood character should note that the code includes design guidelines: new buildings in residential areas must match the street-facing setbacks and maximum lot coverage of existing homes within 300 feet.

Opposition focused on parking and traffic. The Neighbourhood Advocates Alliance submitted a written objection noting that ground-floor retail typically generates six to eight parking spaces per 1,000 square feet of commercial area. The ordinance requires developers to provide one parking space per 1,000 square feet of commercial use, well below that estimate. Council members acknowledged the gap, noting that the city's transit master plan calls for bus rapid transit lines along five major corridors by 2030 and that the zoning change assumes higher transit ridership. Residents without cars, or those seeking walkable neighbourhood services, are positioned to benefit most from mixed-use zoning in transit corridors.

The city will review implementation after two years. A formal impact report due to council in July 2028 will measure housing unit production, commercial space absorption, parking demand, and neighbourhood satisfaction. Residents who wish to comment on early projects can attend monthly Planning Commission meetings, held the second Tuesday of each month at City Hall.