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July 2018                
 Connecting to the West Valley: LOOP Freeway Connections
June 2018  Water, Education and GPLET
May 2018  Crafting A Solution
April 2018  The Rise in High-Rise Living
March 2018  A New Ride - AVs Revving Up to have an Impact
February 2018  Decisions: Spec vs. Custom
January 2018  An Open Highway or Bumps in the Road
December 2017  Grant Woods: 2017 The Good, The Bad, The Ugly
November 2017  The Friendly Skies: The Valley's Airports
October 2017  Reinventing Retail
September 2017  Regional Teamwork and Business Attraction
August 2017  If You Build It, They Will Come; Leveraging Local Amenities
July 2017  Food Fight; The Shifting Grocery Industry Impacts


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June 2018


Water, Education, and GPLET

Valley Partnership tackles 2018 Legislative issues

There were plenty of issues to discuss and the audience questions were lively at June’s Friday Morning Breakfast at the Phoenix Country Club.

With Jaime Molera of Molera Alvarez serving as moderator, an impressive list of panelists offered their insight into this past Arizona Legislative session and put into perspective how some of the legislation will impact the commercial real estate industry.

Sharing their thoughts:

>> Rep. Rusty Bowers, Chair, Arizona House Energy, Environment & Natural Resources Committee, who is leading hearings about the future or Arizona Water around the state this summer;

>> Sen. Kate Brophy McGee, Vice Chair, Arizona Senate Education Committee, who led this year’s education discussion and fight to increase teachers’ pay;

>> Victor Riches, President & CEO of the Goldwater Institute, a key organization in the free market policy discussion and integral in GPLET, TIF, and tax reform discussions.

Prior to the discussion, Valley Partnership President and CEO Cheryl Lombard presented the Signature Annual Legislator of the Year Award to Brophy McGee (LD28). Lombard credited her support of “key initiatives this year, and in years past, has been important to our success.” Valley Partnership’s 2018 Advocates class was also recognized.

Molera kicked off the breakfast examining a variety of areas in the real estate industry and what needs to happen next.

“There’s a bit of misconception that Arizona is a low-tax state,” Riches said. “We’re actually in the middle (income tax) and high (sales tax). As we’ve seen in other states, there are three different types of taxes. There needs to be an expansion of the income tax in phases.”

Said Brophy McGee: “We need to position Arizona to be one of the most competitive states in the nation. The state of Arizona provides some marvelous opportunities. We need to support the big picture.”



Discussion then turned to the Government Property Lease Excise Tax, more commonly known as the GPLET. It was established by the state of Arizona and is a redevelopment tool to initiate development by reducing a project's operating costs by replacing the real property tax with an excise tax.

“When developing a project, we have to ask: why are we doing it, who is doing it, why now, and how does that affect everybody?” Bowers said.

“As Goldwater we’re not a big fan of these incentives,” Riches said. “One thing I want to say, is there’s a certain misperception that we sue over projects we don’t care for. The only time we sue the government is when we think the state is breaking the law.”


There was a flood of discussion when it came to the topic of water. Molera asked the panelists: “There seems to be acrimony over water. How do you see that? Arizona and the business community are going to have to come up with a new formula for water usage.”

Said Bowers: “That’s an easy way to say it’s on the Legislature (to figure it out). That balance has to be struck by all parties on the water issue. Nobody can get shunned to the curb.”

“That’s (water) Arizona’s biggest issue,” Brophy McGee said. “We got nothing done this session.”

Education wrapped up the June breakfast and there was a lot the audience learned from the panelists.

“The Great Recession hit us hard,” Brophy McGee said about education funding in Arizona. “I think we did a good job of creating stability this session. It terms of funding beyond the land (trust) and increasing taxes, we need to have ideas for a sustainable solution.”

Said Riches: “Education has been a bread and butter issue for us over the years. It’s not the dollar amount, but where the dollars are allocated. People should have been marching on the school administrators’ office. It should not be up the Legislature to micro manage the way dollars are spent.”



May 2018


Crafting a Solution


The Valley’s construction labor shortage is impacting real estate development – what are we doing to cope?

Change the social construct. Adopt a new vernacular. Change the perception. 

The May Friday Morning Breakfast tackled the timely issue of the shortage of construction labor. While the discussion touched on what the commercial real estate industry is doing to cope, it also addressed the educational options and changing the perception of the “craft professional.”

“We need and want to be part of the solution. We need leaders with action and solutions,” said panelist Dan Haag, Senior Vice President/Chief Administration Officer, Sundt Construction.

A lively discussion at Phoenix Country Club was moderated by Jordan Rose, Founder and President of Rose Law Group. Joining Haag on the panel were Dr. Jackie Elliott, President/CEO, Central Arizona College; and Mike Greenwalt, Vice President, Rosendin Electric.

Rose kicked off the discussion by asking: “How did we get here?” During the Great Recession, you never would have heard this story: There’s a residential construction site where they are framing homes. A person appears handing framers $100 bills to go to another job site.

“Everyone knew something was going to happen,” Greenwalt said. “We were losing people. There was a move to educate and keep people in the job pool. We had to begin building our next base of electricians.”

How times have changed, Greenwalt said. Apprenticeships are more prevalent. Becoming a craft professional is more accepted. But there is still that perception.

“Youths today do not have interest in industrial arts programs. In fact, they have been cut from school programs,” Greenwalt explained. “There were those of us who wanted to work with our hands. I grew up in the middle class Sunnyslope neighborhood. Everyone on the block was a tradesman. My father worked in commercial real estate. He was the guy who wore a suit.”



An advocate for her institution and its role in producing the next generation of craft professionals, Dr. Elliott didn’t mince her words.

“Higher education has failed the trades and craft workforce,” she said. “Think about a liberal arts program. I have a bachelor degree in English I can do nothing with. We have to get back to what community colleges offer. They were part of the GI Bill to provide every man and woman the opportunity to learn a skill, craft, or trade. We lost sight of that. We turned our noses up to the craft trades.”

To that end, CAC and Sundt have teamed to come up with a solution: an innovative partnership between the two to train the next generation of construction professionals.


In conjunction with Sundt, CAC offers pre-employment, one-year certificates and a three-year academic apprenticeship program that will lead to certifications, certificates, and degrees that prepare students for workforce needs including structural welding, pipefitting, industrial construction and concrete construction technology.


“We lost a lot of craftsmen in the last downturn,” Haag said. “It’s about going school for four years versus a trade. We are talking about different skills. Skills that we need to grow and sustain our economy.


“Forty percent of Sundt leaders came from the trades,” Haag gushed. “Mike Hoover (president/CEO) and Dave Crawford (former president/CEO) came from the trades.”


Haag said one of CAC’s classes in the Sundt program was asked why they went into the trades. Their responses were eye opening.


“They said: I want to work outdoors; I want to see other parts of the country; I want to utilize my natural talents; I want to learn and grow,” Haag said. “One response in particular was very telling: ‘I want to become a better man.’”


The panel also addressed the issue of immigrants in the workforce, and how the current political climate is affecting that segment. Rose asked each panelist what they do if they were governor of Arizona of the president of the United States.


“We need an influx of people, but we also need the educational programs,” Haag said.


“We need more money in education in the trade programs,” Dr. Elliott said.


“We need to produce the best craftsmen in the country,” Greenwalt said.


Which brought the panelists to talk about word choice.


“You said vo-tech program,” Dr. Elliott posed to one of the panelists. “These are tech programs. Skilled trades. Career programs. It’s a career. These are craft professionals. We need to change the mindset. We need to give it a professional image.”


 April 2018


The Rise in High-Rise Living

The Valley’s multi-family market still firing on all cylinders



Unlike most other property types in the Valley, the multi-family sector is going through the roof – literally and figuratively.

April’s Friday Morning Breakfast brought together multi-family leaders who shared their insight in the current market and looked ahead to where the market is going.

Moderator Chris Brozina, Executive Vice President, Mark-Taylor, kicked off the discussion by asking: “How would you characterize the market and where are we in the cycle?”

“It continues to be soaring. There are pockets of softness, but we feel better today than we did before. The Phoenix market is getting stronger by the day,” said Chapin Bell, CEO, PB Bell Companies.

“We are seeing great demographics to support the market,” said Cliff David, Senior Managing Director Investments, Marcus & Millichap.

“It’s a good time to be a borrower or lender,” said Keaton Merrell, Senior Vice President, Walker & Dunlop.

Discussion points included potential overbuilding, affordability, future development or conversions of rentals into condominiums, and who are the residents moving into these A and A+ rentals.

“Despite a lot of buildings across the Valley, it’s actually a case of supply is far short of demand,” Bell said. “That puts us in a good spot.”

Panelists agreed the most lucrative projects are springing up in the urban cores. In the high-density areas, the average price per unit is $170,000. In the urban infill areas, average price per unit is around $225,000.

Affordability always plays a key role in how well a certain property type does in the market. David said Phoenix rental rates are priced more like the Midwest, say Cincinnati and St. Louis.

Dynamics and high growth are spurring “big value adds,” David added. For Class A properties with rental rates of between $1,400 to $1,600 a month, the more value adds the higher the revenue growth.


On the investment side, panelists agreed that although the demand is there, it’s a much thinner buyer pool. However, David pointed that in 2017, 83 buyers of multi-family properties already owned here. Another intangible affecting the market is the renter of today.
“It’s a lot different than the last cycle,” Bell said. “Today’s renter wants to have nice amenities. This includes exercise rooms, high-end pool areas, pet runs. And since the living spaces are much smaller, the common areas need to be that much bigger.”

What lies ahead for the future of multi-family high-rises in the Valley?

“I don’t know who is building the next high-tech amenity,” Brozina said. “We (Mark-Taylor) are concentrating on the fundamental things. We decided to focus on the No. 1 reason people value security: peace of mind.”

Asked if autonomous vehicles and the Ubers and Lyfts of the world will change renter dynamics, Brozina said, “Out stance has been we believe Phoenix to be a commuter society. People like to drive. We build based on heavy parking ratios. But yes, a forward-thinking city with mass transit is important.”

The panelists agree that the Valley’s multi-family market still has a lot of runway ahead.

“Strong demographics and migration will keep us in the conversation,” Bell said.


March 2018


A New Ride


‘AVs’ revving up to have an impact on commercial world


Timothy Papandreou, Waymo Strategic Partnerships Manager, drove home the message loud and clear at the March Valley Partnership Friday Morning Breakfast:

“We are not in the car business; we’re in the technology business. Suspend what you think about autonomous vehicles. The future is now.”

We have all seen autonomous vehicles – AVs – driving through multiple East Valley cities using artificial intelligence (AI) to learn the streets and driving patterns. The question posed to the panelists: can they drive customers to our projects and change our auto buying patterns?

Arizona’s commitment to staying on the leading edge of these technologies is challenging cities to consider how autonomous vehicles will impact traffic patterns, safety, parking, and how/when customers conduct business and travel from their residences.

RED Development is already working with Waymo/Google to bring AI advantages to its commercial developments and see how they can benefit now and in the future.

“For us, it’s about the tenant experience; and at the core, what we all do, to enhance the customer experience,” said panelist Jeff Moloznik, Vice President, Development, for RED. “What happens if no parking is needed? You relocate the benefits.”

While Papandreou focused on Waymo’s fully self-driving technology and how it could be a catalyst for businesses and communities, Kini Knudson, Assistant Street Transportation Director with the City of Phoenix, discussed regulations and plans to prepare for AVs on city streets. Co-moderators were Victor Irizarry and Bryan Maddock of Gensler.

Each of the panelists shared an eye-opening statistic w
hen discussing the topic of AVs:
>> 260,000: Number of cars, motorcycles and busses that will be obsolete by 2030;

>> 95: Percentage of time that a car in America is not utilized;

>> 93: Percentage of accidents caused by human error;

>> 0: Revenue sources such as city sales tax and gas tax if electric AVs become the wave of the future.

“Technology will affect how we commute in the future,” Maddock said. “And think of the different communities that will benefit: those who live in rural areas, the elderly, the disabled. Whole families.”

Added Papandreou: “We have to look at autonomous vehicles not as a disruptor but as an enabler.”

February 2018

Decisions, Decisions, Decisions

To build spec or to build to suit, that is the question

When it comes to making the decision to build spec, or build to suit, “it’s all about timing,” according to Keith Earnest, Vice President of VanTrust Real Estate.

For the first time in many years, there’s a boom of speculative office space under construction in Metro Phoenix. Nearly 70 percent of the 2.1 million square feet under construction is spec space for office and industrial tenants.

The February Friday Morning Breakfast brought together a panel of development experts to discuss what influences they consider when determining their decision to push the go button.

Moderated by Wendy Riddel, Co-Founder of Berry | Riddel, the panel featured Adrian Evarkious, Partner, Boyer Company; James Wentworth Jr., Managing Director, Wentworth Properties; and Earnest.

Valley commuters zipping along the Loop 202 where it intersects with the Loop 101 have undoubtedly for the past few years noticed construction east of Tempe Marketplace. The Boyer Company’s development, Rio2100, covers 52 acres in Tempe.

Freedom Financial Network will occupy 300,000 SF of office space in two buildings on the campus. Another building under construction will serve as the corporate headquarters for Benchmark Electronics.

“When considering a spec building in Tempe, we looked for a freeway and a power center,” Evarkious said. “We saw there was need for an office development. Corporate headquarters, those are really hard to get. And with development, there were some challenges.”

Evarkious said the Rio2100 site sits on a land fill along the river bottoms. For more than five years Wespac Construction performed what is called dynamic compaction. Five-ton weights are dropped at one-inch intervals. 


“When you deal that type of construction hurdle, you can see the issues we faced,” Evarkious said. “It’s a sign of the times, though. People want to be in the center of town. In the inner core.”

Access to the site was just as important, he added.

“There were some natural barriers; that was a concern,” Evarkious said. “It was, ‘I can see it, how do I get to it.’ What we believe is that the 101 is a natural facilitator for office development. Our final decision saw how easy roof tops in Gilbert and Chandler can get there. That was part of the decision because most of the employees are coming from there.”

Also helping move the development along was a GPLET with the City of Tempe.

“That’s what it was created for,” Evarkious said. “Take a dump site called blight by the law. Vestar next door to us started that with Tempe Marketplace. It was a good example of a GPLET and what it needs to do.”

When completed, VanTrust’s Chandler Corporate Center will also take advantage of the Loops 101 and 202, Earnest said. It will also benefit from another retail power center, Westcor’s Chandler Fashion Center.

“Take a gamble, and the timing is good for something to happen,” Earnest said. “You do it when there is enough tenant activity. We are well on our way (with numerous tenants).  We want to make sure there is room for amenity changes.”

The question was then posed: What makes a developer go spec as opposed to build to suit?

“With Freedom (Financial), we’re not talking half a million square feet,” Evarkious said. “You kind of have to roll the dice. If you don’t have a building, tenants we talked to, ask ‘where is your building permit.’ If you have a building now they can envision it. If you say this is what it looks like, this is what you see.”

When it comes to his company’s place in the market, Wentworth said it’s about specializing in redevelopment.

“We’re a little different than Adrian and Keith,” Wentworth said. “We bought a number of buildings post Great Recession. It included a 135-acre campus with vacant buildings that we put a lot of money into. It was risky, but ended up pretty well.”

Wentworth properties include Discovery Business Center; Airport I-10 Business Park; I-10 West Industrial; and 79th Avenue and Buckeye.

Who is currently in the tenant pipeline in Metro Phoenix?

“We have never seen this many big tenants,” Wentworth said. “Tenants are massive today compared to the last cycle. There are waves of tenants on the office side. I call it the herd mentality. Big tenants like State Farm, Northern Trust, they are paying attention to what the others doing here.”

Helping the Valley, all three agreed, is that the cost of doing business is not “out of whack” as it is in other cities, such as Denver. Companies are crossing the Mile-High City off of their lists. And of course, the Valley has affordable housing, great weather, and a relatively low cost of construction.

Staying on its current trajectory, the panelists said, the Valley is in good shape. The 101 is a catalyst. Chandler and Tempe are amenity rich. And the West side is a sleeping giant.

“It’s all about timing,” Earnest reiterated.

January 2018

An open highway – or bumps in the road?

2018 commercial real estate forecast paints a year of growth, with some headwinds for retail, construction work force

With the Great Recession a good 10 years squarely in the rearview mirror, the road ahead for the Valley’s commercial real estate market is a combination of open highway and open potholes.

Leading indicators within the key industries in the market were the topic of discussion at Valley Partnership’s January Friday Morning Breakfast. Moderating the event was Mark Detmer, Managing Director, JLL – and pro soccer entrepreneur.

The panelists were Chris Anderson, Managing Director, Hines; Rick Butler, Principal, Butler Design Group; and Paul Engler, Senior Vice President, Alliance Bank. Arizona Congresswoman and U.S. Senate candidate Martha McSally was the guest speaker.

Engler offered a glimpse through the banking and finance crystal ball. Since architects tend to work at the earliest phases of development and their workload signals the health and growth in the market, Butler offered his prediction for 2018. Anderson shared insights into what’s ahead in commercial and residential development in Metro Phoenix.

What’s ahead for 2018 as it pertains to local economic trends?

“I’m not one to prognosticate, but when (economic guru) Elliott Pollack sounds optimistic that’s when it’s time to sell,” Anderson said with a laugh. “Our economy is showing signs of growth. We also have great leadership in the Arizona Commerce Authority, GPEC, people like John Graham. … Now we need to get an immigration policy figured out.”

Butler said 2017 was one of his firm’s most productive years in some time.

“I’m confident 2018 is going to be good or better (than 2017),” Butler said. “The consultants, general contractors, and others we work with expect another great year. Brokers are upbeat about the market sectors we’re in – industrial, retail, office.”

On technology and the pace of business:

·      Anderson: “Communication is going to dominate the big technological changes.”

·      Butler: “The information highway; that’s where change will happen.”

·      Engler: “Banking security will be a big concern.”

Their final thoughts and what challenges might be on the horizon:

·      Anderson: “Arizona is in good position if grown ups make good decisions and locations for development are well thought out. I think the market will be stable 2018 through 2019. Office activity will pick up. Right now, there is not a lot of supply.”

·      Butler: “The biggest challenge will be good, skilled talent. There is going to be positive growth, but construction labor could be an issue. There could be headwinds ahead for retail.”

·      Engler: “I’m cautiously optimistic. Tax reform will dominate the conversation.”


December 2017

Grant Woods 2017:

The Good, The Bad, And The Ugly


As the final speaker annually at the December Valley Partnership Friday Morning Breakfast, Grant Woods leaves his audience laughing and gasping. But he always sends people home with a positive message.

“America has always been great,” the former Arizona Attorney General proudly said December 7 at the final breakfast of 2017. He was introduced by longtime friend and Maricopa County Sheriff Paul Penzone.




“Two years, five years, 20 years from now we can be greater. We will be greater. We all have to stand up and fight for basic American ideals,” Woods said.

After a tumultuous year on the political landscape both nationally and in Arizona, Woods had plenty of fodder. As only he can, Woods ran the gamut from allegations of sexual misconduct of high-profile political and entertainment figures to handicapping the Arizona Senate race.

On the topic of President Donald Trump, he said: “I just wish he had a better temperament. We as Americans have a special role in the world. We stand for freedom and for trying to be free.” 

The two most disturbing issues he sees facing America are racism and sexism. “Events that happened this year show we have a way to go. We have to fight hard and change it. You are the leaders here. We all have to do better.”

The December breakfast got off to a rousing start as the 2017 Community Project committee was recognized. This year’s event benefited the Society of St. Vincent de Paul urban garden. Check out the video of this year’s community project.


Happy holidays to all of our partners. See you in 2018.

November 2017

The Friendly Skies:

Economic development abounds at the Valley’s largest airports


Each time a commercial flight lands and takes off at one of the Valley’s airports, it means business is being conducted. Passengers and cargo both represent millions of dollars flowing in from these billion-dollar airports.

As the Valley takes advantage of these friendly skies, its leading airports have long-range plans to develop the land nearby their operations. New land development in the surrounding areas will offer businesses expanded opportunities with cargo and transportation operations.  

The November Valley Partnership Friday Breakfast featured leaders from two airports who offered insights into the scale and timing of these developments. Jordan Feld, Phoenix’s Deputy Aviation Director, discussed plans for a mixed-use transportation center, noise-land redevelopment, and major development in the Light Rail corridor.


Phoenix-Mesa Gateway Airport’s Business Development Director Shea Joachim offered an overview of the planned development of the Gateway Aerospace Park, the approximately 360 acres surrounding the reliever airport.


Todd Hamilton of Cutler Commercial shared recent industrial developments. Molly Ryan Carson of Ryan Companies served as moderator.


“Our airports have a direct correlation with economic development,” Carson said. “They are critical form a transportation standpoint. They are a big economic driver. Ours are and continue to be.”

Feld pointed out that a “city built for speed is made for success.” He added that the indirect economic impact of Phoenix Sky Harbor International Airport is approximately $40 billion a year. “That’s the total GDP of Lithuania,” he said with a laugh.

The dollar figures associated with projects under construction or in the pipeline at Sky Harbor range from $100 million to $600 million. This includes work at terminals 2, 3, and 4 and the Sky Train. Parcels of land surrounding the airport range from 30 acres to 120 acres.

“There are opportunities out there for developers and architects,” Feld said. “Do your research. There is a lot coming down the pike now.”

Joachim also touted the development opportunities and economic impact of the airport he overseas in the East Valley. Phoenix-Mesa Gateway is unique in that it is owned by six different government entities.

“This makes for an interesting dynamic,” Joachim said. “It creates a regional economic development asset with six entities invested.”

Phoenix-Mesa Gateway services 48 destinations. Passenger ridership was 1.4 million last year, up 7 percent from the prior year. “Some airports our size are going the other way,” Joachim said.

Speaking of development opportunities, he said: “It’s coming at us. The growth in the Southeast Valley is coming right towards the airport.”

The airport recently approved a deal for a proposed 360-acre office, industrial, and logistics project – Gateway Aerospace Park. Mesa SkyBridge has financial backing from a Mexico City-based commercial security and security technology company. The development includes plans for a Mexican government customs office to help speed up cross-border trade.

With another 700 acres on the east side of the airport, Joachim predicted “all kinds of commercial will develop around it.”

Arizona Rep. Paul Gosar opened the breakfast, making a pitch for the new tax code. “We really need to start rebuilding this country and reinvesting in it,” he said.

October 2017

Reinventing retail:


What used to be a tough sell is now a successful merger of brick-and-mortar retail and mixed-use development


There was a time in the Valley’s past when Park Central and Los Arcos malls were shopping destinations. Department stores in an open-air setting. Entertainment. Restaurants.

Fast forward to the present: Los Arcos Mall is now SkySong, a center for innovation and technology with a dash of retail. Park Central Mall is undergoing a massive facelift designed to make the Valley’s first mall relevant once more by becoming a mixed-use hub along the Metro light rail on Central Avenue.

Innovative commercial developers who are updating the look, feel, and experience of these and other retail centers in Metro Phoenix brought their projects to life at the October Valley Partnership Friday Breakfast.


· Sharon Harper, President & CEO of Plaza Companies: her company developed SkySong and recently purchased iconic Park Central Mall with plans to “reinvent” it into a modern, mixed-use development.

· Larry Pobuda, Senior Vice President of The Opus Group: his firm envisions its 7th Street mixed-use development in Downtown Tempe transforming 3.22 acres into a destination with retail, apartments, and hospitality amenities.

· Scott Nelson, Senior Vice President, Macerich: this long-time developer of regional malls around the country is focusing its efforts – and investing millions of dollars – on one of the Valley’s prominent retail centers, Scottsdale Fashion Square.

Jami Savage-Gray, First Vice President with CBRE, moderated the discussion.

“College towns are getting new housing,” Pobuda said, “but not necessarily dorms. People are finding college towns very appealing, and having a place near their alma mater is also appealing.”

The Opus Group’s 7th Street project will feature two high-rise towers with 407 apartments. The second tower will have 22 walk-up city homes and flats wrapping the first four stories of the tower. The project includes 31,000 square feet of retail space and plans for a 200-room hotel.

“With an urban mixed-use development on University and Mill and supported by Arizona State University, our goal is to have retail that makes it a destination and gives people a reason to come down to Tempe year round. Signs of this evolution are already going on along Mill Avenue as the business community migrates from the north.”


If there is a developer in the Valley that understands how to transform iconic neighborhoods, it’s Plaza Companies. Los Arcos Mall was a thorny issue in Scottsdale when Plaza Companies came on the scene, Harper said.


“By the time we were involved, there was blood in the water,” she said. “There were lots of issues. It was a big battle. The Coyotes left for Glendale. Neighbors didn’t want a proposed Walmart.”


A meeting between ASU President Michael Crow and former Scottsdale Mayor Mary Manross lit the fire, Harper recalls.


“They had this great vision how to reinvent an important intersection in Scottsdale by bringing new ideas and new business,” Harper said. “ASU had carefully researched what this idea could look like. It’s what Scottsdale wanted.” 


SkySong is now a 42-acre, mixed-use development with more than 1.2 million SF of space in four office buildings. It also features apartments and retail. More than 1,000 people work there.


“Creating that environment was inspired by experts in retail,” she added.


Park Central Mall is the next project in the Plaza Companies’ pipeline. Referred to as the “hole in the donut,” Harper says it is surrounded by a talented workforce, vibrant neighborhoods, and is connected with Phoenix College, ASU, UA, and NAU. It also sits along the light rail. It totals 337,000 SF.


“Predecessors who were considering (buying) it always saw it as something to bulldoze and start over,” Harper said. “This is what we’re trying to build at SkySong. It has the workforce, light rail, restaurants around it. It’s all about building culture and creativity and giving something back to our neighborhoods and tenants.”


With online shopping what it is today, listening to shoppers and consumers is more important than ever, Nelson said. Five years ago, Macerich had 73 regional shopping center assets. Today it has 48. In two or three years that number could drop to 40, he said.


“Our strategy is a flight to quality in the brick-and-mortar world,” Nelson said. “High quality real estate; high entry markets. We’re not trying to be the biggest, just the best assets in the industry.”


One of the most popular shopping destinations in the Valley is Scottsdale Fashion Square. It opened in 1951 with a Goldwater’s department store and 15 outdoor shops. Today it features Arizona’s only Nordstrom and a host of designer label stores including Prada, Gucci, and Louis Vuitton, to name a few.


Scottsdale Fashion Square is undergoing a $100 million makeover, Nelson said. When it comes to consumers and their choice of retail destinations, he said: “Shoppers vote with their wallets. Putting in a tenant that doesn’t resonate with them is a mistake.”


Shoppers didn’t open their wallets when SFS opened a Barneys. It closed. Now Macerich is turning that big box into a co-working space. It has already attracted a tech company, Nelson said.


“We’re looking for non-retail uses to help supplement our retail offerings,” Nelson said. “This includes entertainment and food and beverage. We’re trying to create what the Internet can’t do on its own. Scottsdale Fashion Square is well positioned. We certainly can’t rest on our laurels.”



September 2017

Major League Mayors:

City leaders rally around ‘regional teamwork’ to keep Valley in game when it comes to attracting businesses

Valley Partnership Special Event for Board of Directors and Sponsors

Photo Credit: SRP

The Legislature. To GPLET or not to GPLET. The I-11 transportation corridor. Landing Amazon’s HQ2. The Legislature – again.

All were topics of interest Sept. 29, 2017 at the Arizona Country Club as Valley Partnership brought together a panel of five Valley mayors for an event attended by Valley Partnership Board Members, top Sponsors, and 2017-2018 Advocates class of future leaders in the real estate industry.

“Why is this event important as Valley Partnership closes 2017 and gears for 2018?” asked Valley Partnership President/CEO Cheryl Lombard. “Valley Partnership is different because we were founded to work directly with the cities on responsible development issues. This year these five cities are where we spent our time and the efforts of our city/county liaisons.”

From East to West, mayors in attendance included: John Giles, Mesa; Mark Mitchell, Tempe; Greg Stanton, Phoenix; Georgia Lord, Goodyear; and Sharon Wolcott, Surprise. Wellington “Duke” Reiter, Senior Advisor to the president at Arizona State University, moderated the event.

First up was a discussion about the importance of fostering cooperation among the five cities.

“Within a regional economy we compete together,” Mayor Stanton said, “but we do so in terms of building an exporting, innovative, diverse, and sustainable economy. We are doing it now.”

“We are very competitive,” Mayor Lord added, “but we’re honest about it. We don’t hide anything. I’m excited when my city gets something (development). If we have a problem in Goodyear and need some support, I go to these mayors and ask for help. We are a team.”

There was plenty of discussion as the mayors addressed the GPLET, or Government Property Lease Excise Tax. It was established by the State of Arizona as a redevelopment tool to initiate development by reducing a project's operating costs by replacing the real property tax with an excise tax.

In the last Legislative session, t
he Arizona House of Representatives approved compromised changes to property tax breaks used by cities for big developments and jobs projects. It approved an amended version of HB2213.

“Our toolbox is not as robust as it is in other areas (states),” Mayor Giles said. “That’s why the GPLET is attractive to the development community. We are banking on GPLET to continue to be a tool to use. We have to come back this Legislative session and point out we can’t do economic development if we don’t have the tools to be effective.”

One Valley city that has benefitted from the GPLET is Tempe.

“The GPLET can make or break a project, or affect the way it is developed,” Mayor Mitchell explained. “With it you can take a vacant lot making zero dollars and develop it. We need to make sure each city gets an opportunity for economic development. We are competing against cities that provide money for good, quality projects. Where GPLET tools come into play are in K-12 schools. We have to look forward to a modern technology economy. This includes amenities such as art and culture. It’s all tied together.”

A modern and viable transportation system in the Valley represents a home run for everyone, the mayors agreed. Having the proposed I-11 run through the Valley could be a game changer.

“Transportation is something I’m very passionate about,” Mayor Wolcott said. “Connectivity is critical to a region’s success. When I moved here from Minnesota what I saw that was missing – not enough north-south connectivity. I-17 is great, but it’s not adequate. I-11 won’t just be an asset to the West Valley, it will be a tremendous asset for all of us if we get it right.”

Other topics raised included immigration, DACA and NAFTA; what’s happening in Washington, D.C.; bidding on the lucrative Amazon HQ2; developing the Rio Salado; and making sure business leaders let the Legislature know they mean business.

“The best chances for us to win is for us to work together,” Mayor Stanton said. “We must leverage our assets as a community. We must be one economic unit and one economic region. We must act that way to be successful. We need to do what will make us a tier 1 region, not tier 2 or tier 3.

“We can get there, but only as teammates,” Mayor Stanton said.

These mayors hit it out of the park.

August 2017

If you build it, they will come:

Valley’s economic development leaders are leveraging a multitude of key amenities to attract new companies

While location is important when it comes to attracting and retaining major employers, there are new driving forces when companies look to open shop in a new city.


The September 20 Valley Partnership Friday Morning Breakfast brought together three economic development experts who shared their thoughts on these nuances.


“A new trend I’ve seen the past three years is that in eight times out of 10, the person leading the site selection team is the head of HR (human resources),” said panelist Christine Mackay, Economic Development Director for the City of Phoenix. “We had never seen that before.”


All three panelists agreed that most important asset of their respective municipalities is a talented and quality workforce.


“That’s the No. 1 thing we sell here,” said Michelle Lawrie, Economic Development Director for the City of Goodyear. “It has evolved over time. Cost and things like that used to drive decisions. Now it’s the quality of the workforce.”


Added Bill Jabjiniak, Economic Development Director for the City of Mesa: “We have a young and large workforce, not to mention great location. Think of the proximity to West Coast destinations and ports. That’s why we spend time recruiting in California. We are still affordable and have a talented workforce.”


Mackay added that it helps to have three major universities that are doing cutting edge research and are great partners.


“We’re leveraging our universities like never before,” she gushed.


Moderator and Senior Vice President of CBRE, Jerry Roberts, drew varied responses when he asked the panelists what industries their respective cities are looking to attract.


“In the West Valley we’re all about diversification,” Lawrie said. “We are looking to grow density and build in areas like Goodyear and Avondale. Really in the past couple of years we are seeing the fruits of our labor with the industrial opportunities we’ve had. We have lots of land in the 303 corridor. Aerospace and aviation are key industries (to attract). With healthcare the largest employer in Arizona, we are fortunate to have Abrazo West and Cancer Treatment Centers of America.”


“In Mesa, we’re picking up on the word diversity,” Jabjiniak said. “We are an older city and will be crossing the 500,000-resident threshold in the next year. Healthcare and the medical device field help drive our economy. We’ve always been strong in aerospace and aviation with two large and busy airports. Manufacturing to me is huge and in tremendous demand. We’d also like to play in the office environment.”


“Phoenix is more about, ‘yes, please,’” Mackay said with a laugh.


Phoenix is much different, she said, as it comprises 517 square miles.


“There is so much difference between all of the corridors,” Mackay said. “Between the ‘7s,’ traditionally it’s been social services, banks, financial institutions. Now it’s turning into a true tech hub. Tech is where the workforce wants to be.”


A telling sign of the times: In 2012, according to Mackay, there were 67 tech companies in Phoenix. Today there are 296. Mackay said she is also thrilled with the opening of the Loop 202 South Mountain Freeway.


“I never got to create an entire employment corridor,” she said. “That (the 202) is Phoenix’s next frontier for industrial.”


What are Valley cities lacking?


>> Jabjiniak: “There is always room for improved state incentives.”


>> Mackay: “The ability to redevelop existing infrastructure.”


>> Lawrie: “Infrastructure is the No. 1 issue we can enhance.”


How have employers’ wants and needs changed?


>> Mackay: “Employees are now asking how do they connect with the community and be an influence in the city. This is also the first year millennials will be managing Generation Z. To me that is going to be fascinating to see.”


>> Lawrie: “It’s about placemaking; working to attract people and not just companies. Cost has been taken over by the workforce. It’s a different conversation now.”


>> Jabjiniak: “Having the HR director at the table saying personnel is No. 1. It no longer is location or real estate cost.”


July 2017

Food Fight:

How the competitive, shifting grocery industry

is affecting real estate and consumer decisions

The August 18, 2017 Valley Partnership Friday Morning Breakfast event focused on the shifting grocery industry and how it is affecting real estate and consumer decisions.  A panel representing all segments from developer, grocer, and city decision-maker made this topic relevant to the Valley area.


The grocery store has long reigned as more than just a place to buy food. It serves as a gathering place. It provides an experience to those who shop there. In some cases, it’s what defines a neighborhood.


In the past five years, the grocery industry has undergone dramatic shifts. Behind these changes are consumer needs, competition, and most recently technology. As this industry evolves, so do the demands and impacts on the commercial real estate industry.


Why have grocery stores been the best anchor tenants in retail centers, asked panelist Gordon Kieg, Principal, Pennant Development?


“Because they provide gravity,” Kieg said. “Everyone knows where the closet grocery store is. These stores get between 20,000 and 25,000 shoppers a week. On a pure economic level, after paying the mortgage and the car loan, the third largest expenditure for a family is going to the grocery store.”


As competition for the grocery dollar has increased, a food fight of sorts has broken out. The food business is big business. It’s evident on every street corner. It’s also evident when consumers fire up their laptops, home computers, and smart phones to order their groceries online.


“There are so many different venues where you can buy groceries or food of any kind,” said Jan Martin, Senior Vice President of Real Estate, Safeway/Albertson’s Southwest Division. “There are dollar stores and drug stores. Online you have services like Blue Apron and Amazon.”


Online shopping is where Greg Laing, Principal, Phoenix Commercial Advisors, sees the biggest impact. He related that his daughter, who has small children, orders groceries online, opens the back of her SUV, and her groceries are loaded up.

“Some consumers aren’t making those two visits a week to the grocery store,” Laing said. “That means they’re not stopping next door to pick up a sandwich at Subway. That’s not doing well for sales (at other retailers in the center). They’re losing that little bit extra that people used to buy.”


While some neighborhood centers are losing customers, a new trend in grocery stores is evolving in Downtown Phoenix. For decades, it has been considered a food desert, an urban area in which it is difficult to buy affordable or good-quality fresh food.


Block 23, a mixed-use development scheduled to open in 2019, will feature the area’s first grocery store by Fry’s Food Stores. The project will include multi-family and office components. And it will be on the Metro light rail.


Councilman Daniel Valenzuela represents a great number of constituents in one of the Valley’s most diverse areas, District 5. More than 30 languages are spoken in his diverse and densely populated district. While he’s optimistic the city is working with the private sector on easing some building codes – Block 23 is being developed by RED Development – there are still some challenges.


“Some of the things we’re doing right now is mapping the city looking at where food deserts exist,” Valenzuela said, “and where our transportation corridors are. Light rail is crucial. If you’re going to a grocery store and not in a transportation corridor you might as well be in California.”


What does the future hold for the grocery industry? Plenty of changes, the panelists agreed. Will online grocery ordering replace stepping foot into the store? Do consumers want someone else to pick their bananas?


“Grocery shopping is a reasonably intimate experience,” said moderator Barry Shannahan, Executive Vice President, Acquisitions & Development, RED Development. “When it comes to picking produce, personally I want to touch and feel my own food.”


Competition will increase as well. Aldi, a sister company of Trader Joe’s, is entering the Arizona market. Online sales continue to increase. Amazon recently purchased Whole Foods. More than 50 percent of Costco’s sales are for food products. Then there’s Walmart, which isn’t going away.


Kieg predicts consumers will also see more remodeling of their favorite grocery stores.

“You will see novelty concepts like a bar, a sushi place,” he said. “Consumers want to go somewhere cool. It’s a real opportunity for brick and mortar stores that Amazon will not be able to provide.

“There is so much talk about disruption in every industry. In our economy in the 90s there was an enormous disruption in the grocery industry.”





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