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June 24, 2013

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Great summation.

For a city like Phoenix, where the damage is systemic and growing, there are only limited options available. There are no new skyscrapers that will be built on Central. All those land-banked parcels will stay empty for the duration of our lives. There are no undiscovered historic neighborhoods to be reclaimed, either. Nor are there real shopping districts to be gentrified. What we have, instead, is the heart of a city only marginally functioning as it once did. The stench of decay is inescapable from Camelback to Thomas.

The restaurants are the only really good signs of life, and they are not enough. North of Camelback, the tony residential areas still gleam. Once you pass Camelback going south, it's a much bleaker picture. I ask myself this question over and over: what could turn this city around? The hipster demographic is too slight to really help. The stewardship class is mostly gone. The political class is paralyzed by the legislature and by the scope of its real task. What we have, in effect, is a power structure without any real power to change anything.

I see good things happening on the margins. Changing Hands opening a bookstore at 3rd Ave & Camelback is one of them. The Melrose District is another - it almost gives off an urban vibe. Then there are those midcentury apartment complexes getting makeovers, particularly in the 5th Ave & Osborn area. They show people cans still hear the rhythms that made us cool once. The Clarendon Hotel is the epicenter of this coolness and its owner Ben Bethel is a tireless cheerleader for central Phoenix.

Phoenix is a victim of its own bad bargains. Sprawl wasn't an issue when we still had a real downtown and midtown was prosperous. But over time, the cancer took its toll. Will Scottsdale ever face the same regrets we do now? The political soul that abandons its center for the edges is simply begging for its own harsh medicine. They think they can insulate themselves from our decay. They're wrong they probably know it. They can buy time but they can't buy a vibrant metroplex without a strong core.

"The restaurants are the only really good signs of life" says soleri.

Just by coincidence, I went online to look at the agendas of the Phoenix City council meetings. It appears they spend a great deal of their meeting time approving liquor licenses. No time left for planning stuff I guess.

Looks like Global Warming, 116 by Friday, has the blog folks down with heat stroke. Stay cool friends.

We can dream.

The reality is that metropolitan Phoenix has such a relatively limited economy for its size that the possibility of serious urban development does not exist.

The area is an ecological armpit. Still good as a playground for the wealthy and possessing the essence of a resort town. Good place for drifters and sociopaths.

Nice place to have a condo with wealth gained in another state.

I work in the Phoenix Corporate Center. It has been a ghost town since Fennemore left in February. Their moving made sense given that rents had gotten so cheap through the Camelback Corridor and for a much nicer building, but it is killing retail in the area as Fennemore was one of the largest employers around here. On the topic of Midtown towers being great for entrepreneurs and startups, Seed Spot is moving into the hideous building on the SW corner of Central and Thomas. Hopefully that is the start of a new trend.

Once One Lexington was priced properly following foreclosure, it seemed to do well. Perhaps some of the other almost completely abandoned offices in Midtown can be converted to residential. The area is well-served by transit and actually has some of the basic retail (like a pharmacy) that residential requires. All of Central Phoenix needs more residential (the demand is evidently there as what few new apartments are built seem to fill quickly), and I would assume that converting an empty office building to residential is considerably less capital-intensive than building an entirely new residential building.

Plant Sahuaros in the sand.

OK, is it time to stick a fork into Mid-Town?
I don't know, but "Ghost Mid-Town" is fascinating to me as it holds memories of an earlier time that really never sustained itself. Does is really matter? Only if you want to take our town seriously. The current leadership has little vision of anything worthwhile. We mostly need new energy and new revitalized spirit. The 60's were full of good visionaries and good energy. Most of these folks have faded away to rock & roll heaven and it's time for the Phoenix Bird to reincarnate from the ashes of the crazy past. Mid town makes a nice urban jungle, a perfect movie set for an apocalyptic Hollywood movie. (maybe all the absentee slum land owners will default on their land speculations)

Mid town-down town, the Asphalt Jungle.
And I would like to know the water cost for "Steele" Indian park ? The place is covered with unused grass. Except for a small walk your dog plot. Teddy made a mistake in approving
Roosevelt Dam. I anticipate a return of The Seri's in the coming winters.

In the quarter-century since his first book, Killing the Hidden Waters, was published in 1977, Charles Bowden has become one of the premier writers on the American environment, rousing a generation of readers to both the wonder and the tragedy of humanity's relationship with the land.
Revisiting his earliest work with a new introduction, "What I Learned Watching the Wells Go Down," Bowden looks back at his first effort to awaken people to the costs and limits of using natural resources through a simple and obvious example—water. He drives home the point that years of droughts, rationing, and even water wars have done nothing to slake the insatiable consumption of water in the American West. Even more timely now than in 1977, Killing the Hidden Waters remains, in Edward Abbey's words, "the best all-around summary I've read yet, anywhere, of how our greed-driven, ever-expanding urban-industrial empire is consuming, wasting, poisoning, and destroying not only the resource basis of its…

Jon, I suggest we mail a copy to Grady.

Midtown, Per Changing Hands folks they R still working on getting a building permit from City of Phoenix. Good luck, maybe next year.

Downtown, Jon I suggest U might want to by Alfredo a drink and an Alfredo Burger at the Portland. Went to his book signing at Changing Hands, Tempe. Good stuff in his book, Sin Against Hope.

Ate at the newly re designed Downtown Phoenix Market Today, is well done and every time I go, its busy.

I think Central and McDowell still holds great promise for an active midtown hub. I would love to develop a mixed use project on the NWC. Instead of building projects like I did with Artisan Lofts down the street we are now designing corners like this for developers in California. Maybe we can get developers with deep pockets to look out here. Just not sure land prices meet reality. Two years ago no one saw the light at the end of the tunnel now, we are too far past the opening. How quickly things change.

The problem with the NWC of McDowell & Central is that that last time the parcel flipped in 2006, it sold for $25 million, which was double the price it sold for just a couple of years earlier. A Tel Aviv developer proposed three 30-story condo towers at the time but the market was already crashing.

In 1999, a major apartment developer planned a 300+ units for the site with ground-floor retail. This appeared eminently doable but for some reason didn't pencil out. Now, the land is so wretchedly overpriced that something like this could never happen.

Back in 1988, the city was getting ready to condemn the very well-built Park Plaza Apartments on 1st St between Culver & Willetta for the new central library. There were several nearby landowners begging the city to buy their parcels instead. One was Los Olivos Hotel and another were the owners of that same NWC corner of McDowell & Central. They wanted $4 million for it. The city would have saved money on that deal, taken out a huge vacant eyesore, and joined the old civic center with a new one across the street. But it wanted the library for Deck Park, so it never happened. They gave as an excuse the half-serious idea that some developer would swoop in build a high-rise where Park Plaza was. I testified before the City Council on decision day begging them to spare some of the few middle-class apartments in the near-downtown area. It's an example of how foreign the idea of real-world urbanism was in Phoenix then that there were no support for it on the Council.

Phoenix has suffered for decades from a kind of antithesis of the Jane Jacobs sensibility. Call it the Robert Moses Delusion. Build huge this and massive that. Wow the rubes with "world-class boutiques" and "gourmet restaurants", etc. But the challenge in Phoenix has always been loving the particulars of this place enough that you don't rip the heart out of the city down for the sake of daydreams and hustles.

Soleri, as usual, lays out the issues with wonderful clarity. His mention of the Park Plaza apartments brought back a flood of memories. There were so many beautiful apartments in that area at one time. Its a reminder that so many places that are now vast, vacant lots or brutal superblocks were once fine-grained neighborhoods that, yes, people loved.

I don’t live in Phoenix but I like well-done murals. Phoenix has several – they could have more.
http://downtowndevil.com/2013/05/06/45057/valley-youth-theatre-mural-water-writes-the-space-between-dpp/

At 72 i hav spent 63 years watching Phoenix and from Wickenberg to Apahe Junction "GROW". All those memories Jon and Soleri describe started down hill in the seventies and were lost in the eighties. A possible dream might be the loss of all humans in the Valley of the Sun except from South Mt. to North Mt and from 27ave to 64th Street. And for Suzzane hopefully Cavecreek.

Building and buying failed office buildings is a tax dodge -- plus, you own it when things turn around.

Commercial real estate is a big bubble.

Having lived here for nearly 17 years, I can't say that I'm an expert on the topic. However, I have learned a few things about the city of Phoenix and its neighbors.

For one thing, why was Mid-town ever allowed to happen??? Was it really necessary for development to leave downtown and head up Central Ave?? I can't tell you how many visitors have asked about that strange arrangement of a city center and then this long line of high-rises heading away from it towards the north.

But OK. Lets assume it wasn't such a bad idea to grow as it did along that corridor.

I think there are two basic issues that need to be addressed. One - by the city itself. And two - the regional planners (if they really exist as such).

The first issue is what does the future look like? The basic assumption is that anytime now, the growth will return and it will all be champagne and caviar once again!! House will again appear from the desert sand like spadefoot toads during a thunderstorm, and open space will return to the happy days of an acre lost every hour, or whatever it was.

However, a more realistic view (in my humble opinion) is very likelihood that Phoenix could be looking at continued contraction for well into the future. Considering the shaky foundation of our nation's economy, the issue of peak energy, and the rising costs of nearly everything, sprawling behemoths like Phoenix will either contract and live, or stay the course and die a slow, painful, death.

How would or could the city plan for such an event? While I cannot predict the plan, I can say that the core will be the key. People and business will need to work and play within a tighter core in order to survive. No more 40 mile daily commutes, no more cross-country trucking & delivery, and no more cheap land with low taxes on the fringe of the metropolis. This event alone will change how we all value land in Mid-Town, Downtown or Christown!!

The second issue is related to the first, but concerns all the economic heavy-weights of the region (what about the bedroom communities?? So long). All will have the same problem as Phoenix. The retirement communities may still grow, but that demo is hardly a great provider of municipal or economic revenues (with economic exception of health care).

So how do these cities work together to deal with the contraction? Will they devise a grand cooperative plan that allows them all to have a fighting chance at survival? Or will they be at odds with each other, much as they are now, and fight in a free-for-all for the dwindling tax revenues - residential, commercial and industrial?? Some will win, others will certainly lose. And losing will hurt.

I have my ideas on how this will all turn out, but I admit that I am a cynic when it comes to this city. So much potential; so much of it squandered. How can you be anything but a cynic?

The "Good News" Mittelsteadt is that there are smart folks like you. Good post and right on about contraction. However its doubtful that cooperation is in the wind. For your cynic mind try reading "Good News" by Edward Abbey. Ed's best writing is "Desert Solitaire" but his novels while not great writing are fun and predictive.

For water issues there are a number of good books out there starting with Desert Cadillac and Killing the Hidden Waters.
I think the likes of Developers like Johnson Ranch and predictors like Grady Gammage are wrong.

that would be Cadillac Desert.

Very interesting that downtown Phoenix has one of the lowest office vacancy rates of the city. Any explanation on offer?

Midtown's 28 percent looks pretty bad by comparison but it tracks closely with the Phoenix area average of 27 percent. Tempe and the Camelback corridor have office vacancy rates of 30 percent; Paradise Valley's rate is 35 percent; Glendale has a rate of 55 percent if you exclude the Arrowhead area (Arrowhead itself is 26.5 percent vacant); while "Scottsdale submarkets" are roughly 25 percent vacant.

http://www.bizjournals.com/phoenix/news/2012/04/13/high-office-vacancy-rates-persist.html

Midtown's 14 office towers comprise the majority of its office space. When measured against the Phoenix area average of 27 percent, occupancy rates show that 8 of 14 towers are at or above average occupancy (73 percent or above). Some of the remaining towers are close to the average, while others are way, way below, dragging down the average. You can see occupancy rates by tower here:

http://www.bizjournals.com/phoenix/print-edition/2013/03/29/real-estate-midtown-phoenix-struggles.html

So, aside from the question of why downtown offices are doing so well, there is the question of to what extent midtown's office blues stem from several bad apples and, if so, what is the real reason for this? Note that the 3300 Tower is 97 percent occupied, so obviously it's possible to have high occupancy rates in midtown. What are they (or the neighborhood) doing right?

Of possible interest: a copy of feedback to USA Today re Phoenix jobs recovery:

The Money section, page 2B, for Thursday, June 27, 2013 (print edition) shows some badly erroneous data in a sidebar titled "How 100 Large Metros Will Fare In Jobs Recovery". For example, under the column heading "% of lost jobs recovered" (as of 1Q 2013) Phoenix is erroneously shown as having recovered 92.7% of jobs lost during the recession.

In fact, according to the Phoenix Business Journal:

"New research from On Numbers finds the Phoenix area in November 2012 had 141,500 fewer jobs than it did five years earlier. The Great Recession officially began in December 2007. Only Miami (down 150,500), Chicago (down 205,400) and Los Angeles (down 301,300) have lost more jobs than Phoenix during that five-year span."

That is nowhere near a 92.7% recovery rate. Note that Arizona as a state has recovered just 28% of the jobs lost during the recession. The national average is 67%.

I note that this sidebar is missing from the online version of this story. Does USA Today have an explanation they might share, or plans to run a correction with accurate data in a future issue (is so, when)?


Regards,

Emil Pulsifer

P.S. Here's a link to the article giving Arizona's recovery rate and comparing it with the nation's and certain other areas (e.g., New York state's):

http://www.azcentral.com/business/buzz/articles/20130523ariz-slow-place-jobs-lost-during-recession.html

Excellent stuff, Emil. Thanks to all for the great comments.

Three comments:

Emil,

Regardless of all the cheerleading about the housing recovery, the building trades in AZ are a fraction of their former numbers. That could be most of the remaining percentage of lost jobs still missing in action.

Secondly, While we have "end times" scenarios playing out at the local, state, federal and global arenas, I doubt we face any more troubles than have been faced in the past. The difference is that now we have 24 hour cable and the internet. Too much information to too many people with limited time to digest all the data.(Kind of like our intelligence community)

Thirdly, a couple of lines from the movie "No Country for Old men" would fit our situation in Phoenix, Arizona and the US.

To paraphrase:

Deputy, "This is a real mess."

Sheriff, "Well, if it isn't, it'll do until the real mess gets here."

Wouldn't it have been nice if Phoenix could have landed this company SOMEWHERE on the light-rail line. Instead, it goes to Chandler:

http://www.eastvalleytribune.com/local/chandler/article_68cfbdb6-debd-11e2-9058-0019bb2963f4.html#.UcxOAK9lyZA.gmail

There are a few reasons why a delivery company like OnTrac would not move in along the light rail line: 1)the land is too expensive. 2)they wanted easy freeway access so mass transit isn't one of their top priorities.3)The CEO of OnTrac doesn't look like the type that would walk moderate distances or even 10 yards. Building a spec. warehouse/office space with parking right outside the front door probably suits his needs.

All true excuses, pSf. But that's not good enough. I read the media and Phoenix keeps losing these deals. The job count along light rail keeps falling. The mayor is committed to Desert Ridge. Downtown biosciences campus is moving much too slowly. Little new private capital is being invested. Some new bars and restaurants are not an economic-development strategy.

I would be curious to know what Phoenix tried to do to win this deal -- or State Farm or any of the other losses? Did the city or PCA even engage? Did anybody try to get creative about incentives or other help? Plenty of places along light rail have less expensive land and there is both freeway and road access. But somebody has to engage. Otherwise, the sprawl greenfield always wins and Phoenix is the hole in the donut.

Yes, it would be nice to have the externalities priced in so the greenfield's true expenses are manifest -- thus, many areas in central Phoenix become competitive. And yes, something must be done to get central Phoenix land back into market forces, i.e. deal with land banking and frozen, upzoned prices.

But the complacency is maddening. The status quo is just not good enough.

I'm not so sure that Phoenix is actually losing employment to the suburbs. As Emil pointed out, the downtown core has the lowest office vacancy rates in the state. Midtown is faring better than many suburbs. Interestingly, the downtown core also has the highest apartment occupancy rates (and these aren't cheap apartments). I would also argue that the light rail corridor is not losing employment. The Biomedical campus is moving along slowly, but you don't build state of the art medical facilities overnight ... and it IS moving along. Although I do have to add that the Biomed campus seems like a newer development to me. There was really nothing there when I arrived in Phoenix fulltime. From what I have learned on Rogue, the campus is much older than that (2001 ?). My "generational amnesia/shifting baseline" is a factor in this perception.

While the bulk of the employment gains along the light rail are concentrated in Tempe at this point (State Farm HQ, Silicon Valley Bank, USA Basketball, Limelight, etc.), I view a gain for Tempe as a gain for Phoenix since they are connected. I know Tempe is a second stomping ground for downtown residents and vice versa; these two communities feed off one another. This is possible because they are different (Mill Ave./Roosevelt). I also add that it takes the right type of employer to move in along Central Ave. While it would be nice if the mayor would forget about Desert Ridge now, in all honesty, I believe that will soon be the case. Rising costs for transportation and my generation's (Millennials, even some late GenXers) desire to live/work in urban places is creating this shift. Unique workplaces like Cahoots and the One Thomas Building dedicated to "creative workers and entrepreneurs" is where it’s at. The next five years will be telling.

I read awhile back about some East Valley city making a major investment in fiber optics or a digital backbone or some such to support data-intensive tech firms; possibly along Chandler's Price Corridor. I can't seem to locate the reference: any info?

Sorry Emil, I haven't found or heard anything about a digital backbone located in Chandler. The only fiber optic networks I am aware of support the ASU Research Park, which is on Warner, adjacent to the Price FWY. The other network I am aware of is dedicated to ASU's SkySong which is located near the Tempe/Scottsdale border.

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