ULI Arizona Trends Day 2018
The Urban Land Institute provides leadership in the responsible use of land and in creating and sustaining thriving communities. ULI Arizona Trends Day is a one-day, deep dive into the most current state of national land use trends. Throughout the day, better ways to cultivate and use lands are determined, best industry practices are identified, future challenges are recognized and industry thought leaders connect. In 2018, the 40,000-member association is on the leading edge of bridging market realities of today with the land uses of tomorrow. With the ULI Arizona Trends Day theme of Inform. Inspire. Involve., the conversations that took place at the event set the table for what local trends to expect moving forward. The full-day event, held on Feb. 23, garnered more than 850 of the most influential public and private change agents, and covered topics across all real estate market sectors.
Willmeng was the Green Room Sponsor and met an array of industry and market leaders behind the scenes before they hit the stage as panelists. The lounge was a place for panelist to prepare, relax and share their thoughts on panel insights with other industry professionals. The Willmeng booth served as a charging station for attendees to use as their technology needed a boost throughout the day. We are proud to support ULI and the Arizona chapter, and are glad that industry leaders who drive local economy were recognized. We would like to thank Mark Stapp, Executive Director, Master of Real Estate Development, W.P. Carey School of Business, Arizona State University for chairing the event. Please enjoy takeaways from the sessions.
KEY SESSION RECAPS:
Diane Swonk, Chief Economist Grant Thornton LLP; Founder and Chief Executive Officer, DS Economics
As one of the nation’s most respected economists in the financial press, Diane Swonk spoke to a group of over 850 commercial real estate leaders in Phoenix, offering a deep dive into the changing financial issues facing the nation, and indirectly, our industry. With unemployment being at 3.5 percent in 2018, employers should think of employees as diamonds in the rough that can be polished with investment and training rather than interchangeable commodities. While the U.S. is somewhat past the depression, scars still exist, and companies need to elevate the labor force with skills to fill available positions. Interesting trends include:
- Men and women aged 25-55 have declined in the workforce.
- Female U.S. workforce participation is currently less than in other countries.
- 18 states increased minimum wage in 2017, including Arizona, and low-wage jobs are hiring.
- Tight labor markets in some parts of the U.S., such as trucking, will see increased wages.
- The average savings rate is 2.4 percent, and credit card rates are decreasing. People are spending money on projects that add value to their homes, traveling, and going out into their communities.
- Consumer spending will accelerate.
- Net migration will be negative.
- Investment prior to tax cuts was picking up beyond the oil industry, and we saw strongest growth in the global economy in ten years.
- Recent tax cuts may have unintended consequences
Education and Innovation – The Inevitable Space Future
Lindy Elkins-Tanton, Director, School of Earth and Space Exploration; Co-Chair of the Interplanetary Initiative, Arizona State University
“Let’s talk about outer space,” said Elkins-Tanton as she took the stage. She is the second woman in history to win a deep space mission. This mission is called Psyche – a NASA journey to an unexplored asteroid between Mars and Jupiter that will help Earthlings better understand our world, land and water. The $750 million exploration will launch into space on August 22, 2022 and will orbit around Pysche, an asteroid made out of metal as opposed to rock or ice, for 21 months. According to Arizona State University, “What gives asteroid Psyche great scientific interest is that it appears to be the exposed nickel-iron core of a protoplanet, one of the building blocks of the Sun’s planetary system.”
What does this have to do with urban development? The procurement, planning, labor and execution of this extremely complicated project parallels the work and vision of the commercial real estate industry.
The initial proposal draft for exploration Psyche took more than two years and 40 people to develop. From 28 submittals, Elkins-Tanton’s was selected as one of the top five by NASA. The next step was writing the second proposal, which with the help of the same huge team resulted in a more than 1,000-page document. After rigorous interview and quizzing, the mission was selected for flight.
Elkins-Tanton’s credits her team culture to the success. “Systems engineering is the set of processes that allow teams to build something so big and complicated without each individual understanding every intricate piece, and having the end result work,” she said. “When leaders focus on how teams work together, how they treat their teams and how they reward them, individuals are engaged and aren’t afraid to ask what they think are naive questions.”
There are very few countries in the world that can correctly send something out into space to land on a very small target, gather information and take measurements. “Arizona is a leader in aerospace,” said Elkins-Tanton. “In the case of a space mission, there is not flexibility for failure. That’s what our industries have in common – team’s need to make sure that big complicated projects are pulled off seamlessly.”
On a final note, she recommends that to do something really important for the world, thinking in small incremental time periods will not work. “Think 30 years ahead, even 300 years ahead, to make an impact.”
Arizona’s Got Game – Attracting Innovative Companies
Diana Vowels, General Manager, Galvanize Phoenix
With six locations in innovative cities across the U.S., Galvanize teaches web development and data science to bring industry and technology together in collaborative spaces. The Phoenix campus opened in Feb. 2017, and already boasts that more than 110 small and large entrepreneur companies use the space to operate. More than 300 entrepreneurs are on campus every day.
Vowels started by identifying why, after a three-year review, Phoenix was dubbed an ideal location for Galvanize:
- Phoenix’s growing tech employment base would incubate entrepreneur companies.
- With more than four million people in the metro area, significant tech jobs were already in existence or were being created.
- The regulatory and business friendly climate made it easier for Galvanize to operate in Arizona than in any other state.
- The cooperation among the city, state, and economic development organizations made Galvanize feel supported and more than welcome.
“Our New York and Phoenix locations launched at the same time – leases were signed in Q3 2015,” said Vowels. “While the Phoenix space opened in Feb. 2017, the New York location has six more months to go. This further indicates that people truly work together in Phoenix to help businesses like ours.”
She then posed the question: “What does Phoenix need to keep momentum?”
- Phoenix needs to continue its journey to becoming a “connected place” and growing the entire metro area.
- Transportation and parking challenges need to be addressed. Suburban markets need to have smart transportation alternatives.
- Phoenix should understand that every company is a “tech” company. Whether in insurance, banking or real estate, all companies have some tech capacity and positions to fill.
- Encourage people of all ages to learn about technology. Galvanize’s students range from fresh out of high school to veterans and people who are in the middle of their careers.
Arizona’s 5 Cs – Community, Cause, Creativity, Commitment, and Capital
- Jim Heid, Founder and President, UrbanGreen – Moderator
- Cathy Carlat, Mayor, City of Peoria
- Charley Freericks, Senior Vice President, Catellus Development Corp.
- Fletcher McCusker, Chairman, Rio Nuevo Tax Incentive District
- Lorenzo Perez, Co-Founder and Directing Principal, Venue Projects
Urban villages and a metropolitan downtown are what make Phoenix truly unique with distinct character. “What happens in those concentrations is interesting, but even more exciting is the opportunity to create experiences between them with transportation,” said Perez. “Phoenix is currently in an interesting position to define what it means to be an American city.”
The panel agreed that abandoning cars as the primary source of transportation is the major difference between an urban village and a core. “Cities should be about people’s ability to live, work and play, and vehicles sometimes cause frustration” said Freericks. Tempe, Ariz. is the epitome of a city that has adopted alternative transportation – light rail, trolley, autonomous vehicles and bikes keep people getting from A to B.
Does this growth and innovation mean that suburban markets are on their way out? “Phoenix is a marketplace that grew up on suburban model, and that differentiates us because of the thought-leadership and insight that we have on suburban development,” said Freericks.
As the Mayor of a suburban market, Carlat says that Peoria takes steps to help private development come to the city with the least amount of risk and the most amount of vision. Throwing out the rule book is the first step to adjusting to factors and figuring how to make things work. Having a municipality that is willing to partner and adaptive re-use policies also help to incentivize firms.
Attitude also influences development in suburban markets. Arizona and its cities have been sending a pro-business, pro-diverse population message. Rather than competing, Arizona’s economic development associations, organizations and committees coordinate and collaborate. “The best projects are the result of public and private entities working hand in hand,” said Freericks.
The Rio Salado Re-Imagined – Moving from Concept to Legacy
- Neil Giuliano, President and Chief Executive Officer, Greater Phoenix Leadership – Moderator
- JD Granger, Executive Director, Trinity River Vision Authority
- Melissa McCann, Director, University City Exchange, Arizona State University
More than 50 years ago, Arizona State University students envisioned the grand plan for the Rio Salado River expansion in Tempe, Ariz. In 1997, a regional financing plan was put on the ballot, but the initiative failed in every city except Tempe. In 1997, with Giuliano as Tempe’s mayor, construction commenced on Tempe Town Lake. It took ten years to fully build and has since put the region on the map as the second most visited destination in Arizona behind the Grand Canyon.
“In the last few years, there has been good conversation about the other 40 miles of river area from East Mesa to Buckeye,” said Giuliano. “Senator John McCain has convened people and got them excited about what the expansion would bring to the community and how it would engage them.”
Support is in abundance. According to McCann, there are eight communities, six cities and two native American communities that have expressed interest in finally taking big steps to move the project forward. In comparison to other river expansion projects across the U.S., the Rio Salado river expansion is one of the most ambitious. Critical issues include water, funding, economic development and community.
“We are not imagining to extend a great amount of water across the corridor,” said McCann, emphasizing that the project will be sustainable and will focus on the developments around the corridor. “The economic growth that the project will bring includes e-commerce but this project has also got us thinking about the transportation, housing, workforce, tourism, arts and culture across the communities it will impact.”
What is appropriate for each community looks different. Ideas for development will come from constituents, and what is right for the health and wellness of the community will be heavily considered. The goal is to create an urban, connected environment that nurtures live, work, play and learn.
Funding will come from federal, state and local levels, and public and private relationships with be leveraged. “It won’t happen overnight and will take decades to realize,” said McCann. “We will rely on the community to help us determine progressive solutions that will make the project happen.”
From experience with the Trinity River expansion in Fort Worth, Texas, Granger’s tip was to determine federal and local champions. “This project will take passion, guts and money,” he said. “The second part is community. Get them heavily involved so that they own and respect the effort. They will push the project harder than you at times.”