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December 02, 2010

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But as Barry Young always tells us, if you want to know why people will keep moving here, just go outside. The Real Estate Industrial Complex: Blowing Sunshine Up Your Ass for Nearly Half a Century.

"The solar industry likewise got away." - Rogue

It "got away"? When was it ever here in the nation's sunniest state? It would be more accurate to say that the solar industry stopped on the coast, took a German vacation, and now has a second home in China.

http://ratecrimes.blogspot.com/2009/05/where-sun-does-shine.html

The political leadership in Arizona has made the state a world class laughing stock. Their political posturing is however attractive to Americans in the heartland who have no experience with other cultures. The dumb will still come to Arizona.

With the current leadership in Arizona, the state has no ability to attract creative professionals in knowledge based industries. Call center jobs, low paid rank and file government employees, and mom and pop businesses are the state's future. The prisons will be well funded but not much else such as education, health care, transportation or the arts.

Some Arizonans will acknowledge that the state is backward, but they will also claim that it is not as bad as other states such as Texas. Sorry, Arizona is now the worst of the worst.

One of the things that makes hacks in the real-estate/industrial complex rich is telling people what they want to hear. Is there really any mystery about that? It's the guiding principle in careers from David Broder's to Juan William's to Laurie Robert's. It's why there's a Goldwater Institute. It helps explain why college sophomores read Ayn Rand - finally someone who understands ME! Telling people what they want to hear makes for good advertising and bad statecraft. It's why Talton now lives in Seattle and why Bob Robb opines for The Arizona Republic. It's why Jan Brewer is governor and Terry Goddard will be padding around in carpet slippers. We keep thinking people are going to wake up and understand that a steady diet of bullshit is bad for them. Au contraire. They actually like it because confirmation of fixed viewpoints is the ultimate flattery. We're a nation of self-flatterers gorging on bullshit and feeling sorry for ourselves at the same time. Now, cut my taxes before I decide to go Galt.

Thanks for saying what should be said, Jon. Unfortunately, as you note, the so-called leadership in AZ has no initiative, no creative thinking, and no vision. So, they are just waiting for the housing boom to start up again.

I am sure that Gov. Jan and her friends think that when they talk to business leaders outside of this state, and those business leaders are politely saying nice things to them, that Gov. Jan and friends think "Wow, we have really got them in line to invest in AZ!!!"
But, those business leaders then turn around and laugh to themselves about AZ.

Brewer, Pearce, Kavanagh, Antenori, Burges, Gould, Adams, Harper, Tobin et al should be impeached for incompetence. The revival of their one-trick-pony tax cut strategy for businesses and the wealthy is a proven loser.
Welcome to Aribama... where you get the government you deserve.

I misread the title and got excited for a moment. I thought it said "The rule of ho's". I was expecting a piece about Elliot Spitzer and how he turned his "misfortune" into a career in television.

Nevermind.

Great article that spells out many of the issues that Arizona and metro Phoenix will need to overcome. One reason I continue to read Rogue are for this articles that continue to outline issues regarding the community I live in.

I do have an issue with per capita income however. It is not really an accurate measurement of real income/prosperity. Per capita income is the total income of a region, city, metro, country, etc divided by the total population...

Right off I can list issues with this measure and why this would not be the best way to paint a picture of realistic employment and earnings of a particular place. Median Income is the most accepted measure or point of comparison because it is less skewed by the very few extremely rich outliers in a particular area; one where Seattle would have particular advantage (those like Bill Gates).

Seattle's median income for 2009 was $61,786 and for Phoenix $50,140...median home value for Seattle was $491,600 and for Phoenix $218,000. Basically, I find that income and livability isn't really an issue for Phoenix, as Jon has written, which can be measured in terms of past and current population growth (for Phoenix). People, even young professionals, prefer to live in Phoenix because income compared to cost of living is much more attractive and sustaining a lifestyle congruent to what can be afforded in Phoenix would take the income of an anesthesiologist in Seattle.

Something that for 90% (or greater) is completely out of reach in that pocket of the Northwest. This is one reason that less than 16% of the population of metro Seattle lives in the City of Seattle and instead the far flung suburbs, some greater than 60 miles, where population is growing faster. A reality that is drastically different even compared to other high cost principal cities like NYC, L.A., etc and lower cost cities like Phoenix, Houston, etc where new emigrants are settling in the city (urban zones) at a faster rate then the suburbs (percentage wise and numerically).

This is one reason I believe that most people in Phoenix outside of the central city and other "blue" districts" and regions in the metro don't really bother themselves with voting, raising a fuss over immigration etc. People are happily and mistakenly sedated by this. Instead those that are most polarized are left to making the decisions.

Phoenix' trouble with economic diversification is and should be a top priority for the region. We do not have the political brain trust in place that would be most effective in this endeavor. If anythings happens it will be more because business interests and our wealthy stewards actually step in to interject some sensibility, and moderation (LOL) because they care about Phoenix.

Phoenix is nominally more affordable than many other metropolitan areas in the United States. The affordability initially attracts some young professionals and others to the area.

Unfortunately, the young, energetic professionals who relocate to Phoenix soon realize that middle management and executive positions are very light on the ground in Maricopa County. The anti-intellectual, non-analytical ethos of Arizona is not compatible with federal government regional or corporate headquarters being located in the state.

Several years ago a cousin of mine moved from Los Angeles to Scottsdale to take a managerial job. At first he was thrilled about the low cost of housing and other living expenses in Scottsdale. A year later I heard he had returned to southern California. I called him to catch up. He told me that in fact the nominal cost of living in Scottsdale was lower but wages were also lower and, most importantly, opportunities for advancement did not exist for executive employees in Arizona.

A young, ambitious professional with foresight should not be lured into relocating to dead end Phoenix simply because rent is lower.

JMAV, it is true that there are not many Fortune 500 companies in Arizona but your analysis is very much wrong. Phoenix is a regional headquarter stronghold, ahead of Denver and any other inter-mountain state and on the level of Seattle, San Diego, Portland, etc. etc. The difference as Jon mentioned is that Phoenix seriously lacks diversity in terms of science related occupations.

With all the hoopla surrounding luring bio-tech/med companies to the region we are sorely behind. The same is true for solar although I slightly disagree with Jon's assessment and believe Phoenix and Arizona are gaining nationally and internationally in that regard.

Arizona is a net exporter of solar now and is only positioned to grow especially since many regional, state, etc laws have been tweaked that will encourage solar energy production within the state's borders. But on JMAV's initial observations of lack of executive employees he is far off. Early Census figures and job related studies show that traditional companies have many management, upper management, and executive positions within the metro Phoenix area; Phoenix is far ahead of Scottsdale in this regard.

Your cousin, JMAV, may have been reluctant to look for career advancement outside of Scottsdale (a.k.a. Snotsdale), especially if he fell into the "I don't go south of Shea" category...a mantra in which many newcomers and emigrants fall for.

Another note...although Scottsdale is a neighboring city of Phoenix in the metro area the cost of living in Scottsdale is actually higher; significantly so in many areas of that city.

This is do to a large number of the wealthy "second-home owner" population, wealthy retirees from other regions of the U.S. and business executives who decide to live in that city instead of the city hosting their headquarter offices (Phoenix). I think this is a significant issue.

I know I am biased because I prefer and live in downtown Phoenix but I think that executives and business leaders should live in the largest and most important city of the region; Phoenix. Nonetheless this is an issue the plagues many American cities.

I'm not sure where PhxSUNSfan is getting his facts since he provides no links. This is clearly the worst bust in modern Phoenix history and it points out (just as Talton did for years before the actual collapse) the perils of an undiversified economy. Belief-based assertions and happy talk are hardly going to change what is the consensus reality of Phoenix, not just in this blog but in the national media as well.

First, let's quickly dispense with the fairy tale that central Phoenix is experiencing some major revival. It's not. The little bit of construction going on (a new county courthouse, Cityscape) are not delivering new housing units. The existing "new" product, indeed, is either sitting empty (44 Monroe), losing residents (Orpheum) or languishing in bankruptcy (Summit at Copper Square). Foreclosures and collapsing housing values tell the rest of the story. There is no bulwark against this collapse. North Scottsdale is faring much much better than Phoenix in this arena. The historic neighborhoods are treading water but prices are way off from their peak.

The argument about executive compensation and hiring can't escape the aroma of its own anecdotalism. I scan the Phoenix Business Journal daily and get no sense of any upsurge in employment, company relocations, or much if any economic vibrancy. If Phoenix, in fact, did enjoy a small uptick in employment over the past year, it was in spite of the overall depression of its dominant industry: homebuilding. This doesn't mean there aren't some bright spots. In a metroplex of nearly four million, you will have some. But the engine pulling our train has seized up.

Do young professionals and the creative class prefer Phoenix? If so, the evidence should show up where it really matters - the voting booth. Cities like Seattle, Boston, San Francisco, Chicago, NYC, Portland, and Minneapolis are very liberal. Indeed, they're so liberal that they make the states where they're located blue. Does Phoenix? No. There's a bluish tinge in central Phoenix but hardly enough to sway the state in the direction of sanity. Arizona is a very urbanized state but we might as well be Kansas given the way we vote. And what that suggests, as Talton is continually pointing out, is how the Big Sort is creating our reality. Phoenix attracts primarily don't-tread-on-me soreheads, retirees, and the anti-communitarian right. Now, we all know bohemians, gays, DFHs, and high-tech wizards. But their numbers are too small to make Arizona dynamic, let alone liberal.

Creative-class arguments are usually too subjective for their own good but political results tell a definite story. Arizona is reactionary. Unless you think the rightward trend in recent history is an aberration, there's no way to square this reality with blather about Phoenix being some cutting-edge oasis of hipness and excitement. I'm happy that downtown has a bit more buzz that it used to but that hardly means it's really cool. What makes Phoenix cool, IMO, is its history. Before this city became the blob eating Arizona (pace Ed Abbey), it was a real place with real people doing amazing things. Now, it's anyplace. Yeah, that's great if you're a metrosexual looking for identity markers in bars and clothing stores. It's terrible, OTOH, if you want a city to nurture and love. The stewardship class is gone and we're all that's left. God help us.


Soleri, much of what I said is from the Census and links I've provided in other conversations. Likewise, you provide no links. Especially links that say there are no stories in the Business Journal, etc that point to employment gains and other growth in Phoenix. This is utter bull...completely erroneous and untruthful.

As for Central Phoenix growth, this too is occurring. Jon provided in his story that the only stronghold in any real estate is in apartment/commercial rentals. This is occurring primarily in the growing central city. It would behoove you to provide links for your assertions if you as for them as well. Just sayin...

http://www.bizjournals.com/phoenix/news/2010/11/30/small-business-hiring-rises-in-arizona.html

http://bizjournals.com/phoenix/news/2010/12/01/job-market-shows-gains-housing-market.html

Again with voting, you provide no links but the simple truth is that no one votes except, as I've said, those that are most polarized. The young, liberal, democrats for reasons I mentioned do not feel it necessary to vote. This is two years old, but only 54% of the voters in Arizona in 2008 voted for McCain, 48% for Obama. Medical pot was approved, programs that were denounced by the right, Tea Party, Anti-tax, Pearce cohort were approved by landslides...

I think this points out the opposite of what you say. The central and blue areas of the state are as solid as Seattle, the rest of the state (this election) is much more reactionary and red which is why districts outside of those areas mostly vote in that direction. But by the numbers, it is much closer because of the city which primarily explains the contradiction in voting habits in Arizona.

Many of these articles also provide links; one other note, while the unemployment rate rose in the U.S., it continues to decline in Phoenix and Arizona. It is not stellar growth comparable to 2006, but it is the opposite growing unemployment that is affecting cities you seem to love but don't live in: Seattle, Chicago, Portland, Minneapolis...

Downtown Seattle busts and job rush to suburbs:
http://www.newgeography.com/content/001518-the-downtown-seattle-jobs-rush-suburbs

http://seattletimes.nwsource.com/html/businesstechnology/2010058502_jobs14.html

These links and those posted above contributed to what I wrote.

phxSUNSfan, you provide a rather thin reed to buttress your argument about central Phoenix. Apartment units are more higly priced? That's not an argument.

Otherwise, your assertions could be right out of Joel Kotkin. Yes, there are some advantages to being an autocentric nowheresville since housing is very cheap, along with wages, low taxes, and the entire catastrophe of ultra-low density sprawl. Seattle for all its sprawl still has a genuine nerve center downtown. Real estate interests don't dominate the economy and don't torture the public discourse with their own self-dealing.

If you want to believe that Phoenix is better than Seattle, you're not an urbanophile. You're an apologist for pointless, character-free sprawl. Anyone with an iota of urban sensibility knows a world-class city like Seattle is infinitely more interesting than our sad city, Lubbock on steroids.

A final word: I appreciate sharp and contrarian viewpoints to Talton's. They make his and ours better by their rigor. But your arguments rely too heavily on self-vouching, self-referential chatter. I'm not really interesting in making positivist arguments with statisitics that are couched in innumerable variables. That's why it helps to know Phoenix, its history, its trendlines, and its competition. I don't get the feeling you're really interested in much beyond cheerleading for Phoenix. That's fine and I'm sure there are others who appreciate your effort to locate silver linings. I wish I could even be persuaded by some of them. I'm not.

LOL, just in time Soleri. I actually posted more links that explains the opposite of what you describe of Seattle; an ordeal occurring today as we speak. Downtown Seattle since 2000 has lost greater than 20,000 employees and continues to lose out to its suburbs in huge waves of employment. Just look at the information I posted.

"More highly priced apartments." I'm not sure where you are getting this as a cornerstone for one of my positions but its not a marker I used to make my assertions. Also, I never said that Phoenix' downtown was greater than Seattle's but that the positive momentum was there. Unlike downtown Seattle, downtown Phoenix experienced just the opposite in job growth since 2000 (with 20,000+ jobs added). There are now 80,000 employees in downtown Phoenix; in comparison, downtown Seattle now only has 140,000 employees.

A drastic reduction in numbers from when Seattle was geared to have over 200,000 employees, all but which have taken the "auto-centric nowheresville since housing is very cheap, along with wages, low taxes, and the entire catastrophe of ultra-low density sprawl" to another level in the Seattle/Puget Sound region." The only exception I'll take to this quote of yours, is that the housing isn't "very cheap" just cheap and much less expensive in metro Seattle.

The truth is I love the walk-ability of downtown areas in other cities and that is the course I would like downtown Phoenix to take. From my few years of living here, I've experienced much change in that regard. From hundreds of new "neighbors", restaurants, businesses, visitors, etc and more to come. This is not to say that we have a little slice of Manhattan in Phoenix but if you live in downtown the change toward density is evident year after year.

If there was anything opposite of cheerleading that evoked the same imagery that is what you provide, Soleri. I'll call it "boo-leading." It is the constant rebuttal of facts with anything but emotion, disdain, etc that is unsupported.

My take is that you either love Phoenix or hate it and no amount of change would influence the latter much; damn the facts and statistics.

"...is that the housing isn't "very cheap" just cheap and much less expensive in metro Seattle."

I meant to write that housing is cheap and much less expensive in SUBURBAN Seattle (in comparison to the city itself). This explains the mass exodus in Seattle to a large extent. Seems that even the liberals in Seattle are easily persuaded by the sprawlville autocentricity of suburban isolation and square footage of ticky-tacky cardboard "houses" with vinyl siding.

"Supply-constrained areas of the Valley, including Central Phoenix and Tempe, continue to outperform the metro. The Central/Northeast Phoenix/ South Scottsdale and Tempe/South Phoenix submarkets currently have the lowest retail vacancy rates at 9.9 percent and 10.6 percent, respectively."

Compare Central/Downtown Phoenix vacancy rates of 9.9% to Downtown Seattle's vacancy rate exceeding 20% (from link provided above).

http://www.special-assets.com/2010/06/phoenix-2010-q2-local-retail-report/

phxSUNSfan, I don't want to carry on this debate with you since I have so little trust in the relationship between your arguments and your sources. But suppose for a moment that your arguments are valid. Would I believe them because Phoenix is growing and Seattle is not? It would be akin to listening to someone extol Houston at the expense of Paris because Houston has more growth. That's really what your specious argument comes down to. It's compelling for glibertarians and real-estate hucksters but any genuine urbanist would just shudder and walk away.

Still, I have to call bullshit on this idea that downtown Phoenix has 80,000 workers. For years, the figure has hovered between 25,000 and 30,000. Now, I'll assume with the arrival of ASU Downtown, the biosciences complex, and a couple of law firms imported to Cityscape that this figure might be around 35,000. It's easy to guess how this 80,000 figure was arrived at. Simply include all the office buildings, hospitals, and clinics up Central to Camelback Rd. Does linear development with all the urban energy of the road to the airport count as downtown? No.

Paris and Houston? Really...yes this conversation has gotten completely out of hand given centuries of urbanization for Paris. Paris and metro Paris has the urban density consistent with metro Los Angeles (the United States' most densely populated urban area) but with much, much better transit; one rivaling NYC. You cannot compare Paris with a Houston.

I took a look at the definition of 80,000 "downtown employees" and this includes the Central Ave. Midtown Corridor but not the Camelback/Biltmore area, nor the "Airport office zone," nor any office districts east of 7th St or west of 7th Ave. Downtown alone (the 1.5 square mile area bounded by McDowell Rd, 7th Ave, 7th St, and Jefferson) has an employment base of 40,000 employees half of which are City and County workers. At Phoenix City Hall there are over 14,000 employees in the 20 floor building and surrounding Court Tower, Phoenix P.D. Headquarters and Council Offices and Meeting Rooms...

Here's my anecdotal evidence: I can hop on my bike in Seattle and ride happily either south to Portland (awesome!), or north to Vancouver, BC (awesome!) in a single day (yes, I've done both).

In Phoenix, my choices are either Tucson (nice destination), or Flagstaff (nice destination, but a terrible climb).

However, at the half-way point, I would always rather be returning to Seattle.

I'll toss into the debate the fact that I've spent the weekend Christmas shopping in downtown Seattle, all within a few blocks of my condo. The crowds, decorations and hundreds of national and local stores are all magical. I do miss the Christmas shopping of my youth in downtown Phoenix and Park Central in Midtown.

Regarding the comment by phxSUNSfan that "Phoenix is a regional headquarter stronghold" on the order of San Diego, etc., a recent article in the Business section of the Arizona Republic (the best section for plain-speaking), quoted Barry Broome (then president of the Greater Phoenix Economic Council):

"Broome said Arizona has better luck persuading California-based companies to expand here, such as to open a customer service or call center, than to relocate." (The article notes that these back-office jobs "might not be the high-paying jobs Arizona craves".)

"Companies that want to move their headquarters out of the Golden State are more likely to move to states that offer better incentives, such as North Carolina, Texas, Tennessee or Virginia, he said."

This despite the fact that "Compared with California, Arizona has lower taxes, cheaper land, less regulation and lower average wages, which all mean reduced costs for employers. It also has more affordable homes and easier commutes."

Another Arizona development group executive, Julie Engel, observed, of California companies, "We were under the impression that some of these would be easy to locate here...We actually identified them as easy pickings, as low-hanging fruit, but we couldn't get them to budge."

http://www.azcentral.com/business/articles/2010/07/25/20100725biz-California-on-mind-of-Arizona-leaders-0725.html

I do agree with phxSUNSfan that median income is a better measure of average economic well-being, for the reasons given. That said, one must be careful to specify median personal, median family, or median household income.

I would choose median personal income because that filters out the effect of larger households and more workers per household which can skew data and give a better impression of economic prosperity than is warranted by the facts (e.g., if grandma has to take a job as a Wal-Mart greeter in order for the household to make ends meet).

The reason that most of Metro Seattle's population growth has occurred outside the city proper, is that the city has very little elasticity for expansion, geographically or politically. That was certainly a mistake in city planning.

Perhaps someone more familiar with Metro Seattle can tell me if they have a form of regional government with revenue sharing that allows the city itself to benefit from suburban development -- and vice-versa -- and to what extent such a relationship, if it exists, tilts in one direction or the other.

Incidentally, I have recently experienced serious personal financial problems, and can no longer afford a monthly bus pass, hence have no Internet access (library). I wanted to say that I miss reading the blog here as well as commentary by the blog's (often highly informed) readers, as well as the recherche Front Page links which Mr. Talton provides; also online correspondence chess, and so forth. I do feel as though my mental faculties are atrophying.

If I had the money or at least some facilities that could substitute, this would not be the case, but lack of nearly everything due to financial constraints, as well as depression resulting from this, and other factors relating to it, are undoubtedly degrading my mental faculties.

I'm not sure when I'll next have the opportunity to weigh-in here, but I did want to say that I hadn't abandoned the blog due to apathy.

P.S. The same article also notes that California has "the largest number of biomedical companies in the world, as well as 57 companies on the Fortune 500 list for 2010". So clearly, taxes and regulation are not the only, or even the primary considerations in determining a state's economic viability.

California's current budget problems and deficit result, in fact, from structural problems similar to Arizona's in certain respects: an over-reliance on sales taxes and insufficient property taxes. Decades ago, California voters gutted the state's property tax income via Proposition 13, which is now an article of the state's constitution. Technicalities in the law also allow corporations to have a lower tax burden than private homeowners.

Reading some of these comments, I wonder if some of these people have ever even been to Seattle? Growth in people is hardly a good measure of a city or region's economic health. Same with the housing stock.

Obama is the schoolyard sissy and the Republican bullies are having a field day with him. Truly, a disgusting thing to watch.


Emil:

E mail me at robroby121@yahoo.com. I live in Phoenix and might be able to help you with the bus pass.

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