Business owners planning a commercial buildout in Phoenix, Arizona often start their budget with a number in mind, usually from asking a friend or finding an old article online, only to find out that number does not hold up once real bids come in. According to Mike Marden, a registered architect and licensed general contractor and founder of WDS, a Phoenix-based integrated design-build firm, that gap exists because per-square-foot pricing depends heavily on finish level, equipment, and market conditions at the time of the project.
What Per-Square-Foot Numbers Actually Look Like Right Now
Mike says his firm arrives at square footage numbers by looking backward, not by pricing a job by the square foot directly. “We’ll go to all our medical jobs, we’ll look at the total build number, and then we’ll go back to the square footage,” he explains. Based on the last 12 months of data, here is where things stand for his firm in the second half of 2026 for work in the Phoenix area:
$125 to $150 per square foot: The bare minimum for the most basic build-out, where the owner may be sourcing finishes like flooring themselves and the contractor is largely handling walls, mechanical, plumbing, and electrical. Mike says it is rare for his team to see a project as feasible at this price range in Phoenix in 2026.
$150 to $200 per square foot: A basic tenant improvement with no branding or custom finishes, aimed at simply getting a business operational.
$200 to $300 per square foot: The point where finishes and equipment enter the picture, which can mean appliances for a restaurant or monitors and lasers for a medical office. Projects in this range can also include customized cabinets, solid surface counters, multiple layers of lighting, or specialty fixtures.
$300 to $350 per square foot: A full, high-end build-out with premium finishes and a heavier equipment load, common in restaurants and specialized medical suites.
$400 and up per square foot: Ground-up construction, which brings in structural work and site work, the latter being one of the biggest cost variables depending on lot size.
Mike is quick to caution that these are directional numbers, not fixed rules. Regional labor availability, the number of interested general contractors, how saturated the local market is with other projects, and how many trades are being pulled toward one large job at the same time can all shift these ranges. Pricing also depends on the quality of the contractor and their overhead. Avoiding the cost of a reputable contractor and their overhead might mean paying for a longer schedule with a newer or less resourced contractor instead.
The Surprises That Show Up Mid-Project
Even owners who plan carefully often get caught off guard once construction is underway. Mike points to existing conditions as one of the most common culprits. “We make assumptions about infrastructure or support in an existing wall, and now we open it up, and the items found do not exist or are not up to code, causing rework to bring it into compliance,” he says. Drawings are a starting roadmap, not a guarantee, and when field conditions do not match what was assumed, costs and timelines both move.
Inspections are another frequent surprise. A requirement as small as battery backups on exit signs can trigger an unplanned purchase if it was never explicitly called out in the drawings. Because inspectors have final say and their requirements are not always spelled out in detail ahead of time, Mike says owners should expect at least some adjustment here.
Project duration itself often becomes the biggest surprise of all, since delays from landlord requirements, city review, longer product lead times, existing conditions, or owner-requested changes all compound into a longer schedule, and a longer schedule almost always means added cost.
Simple Buildout vs. Heavy Equipment
The jump from a basic tenant improvement to one loaded with equipment and premium finishes is not incremental, according to Mike. It can roughly double the total cost. “If we’re talking the most basic project at $150,000, and we’re comparing it to one with all the branding, fancy finishes, and medical or restaurant equipment like appliances in there, now you’re at $250,000 to $300,000,” he says.
For owners trying to control that jump, Mike recommends two strategies. The first is right-sizing the space from the start rather than overbuilding for a business that has not yet grown into it. The second is phasing the project, adding cabinetry, equipment, or additional service rooms later as revenue and demand justify the investment. Both approaches let a business open its doors sooner without locking in costs it does not yet need to carry.
WDS is an integrated design-build firm based in Phoenix, Arizona, comprised of WDS Architecture PLLC and WDS Commercial LLC, subsidiaries of Marden Companies LLC.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
Disclosure: Individuals or companies mentioned may have a commercial relationship with KeyCrew.
