The 2020 version of ULI Trends Day, which was held February 26 at the JW Marriott Phoenix Desert Ridge Resort, drew its biggest crowd in its 15 years, as more than 1,000 registrants signed up for the day-long, deep-dive into development trends in Arizona and beyond.
The day, which had the theme of “From Hindsight to Insight,” offered many insightful discussions, and provided valuable market information for attendees. One of the highlights of Trends Day is the keynote address, which featured acclaimed photographer Platon. He detailed his many interactions with the subjects he photographed during his career, which include some of the most powerful men and women in the world. Platon is famous for his portraits of presidents George H.W. Bush, Bill Clinton, George W. Bush, Barack Obama and Donald J. Trump, as well as world leaders like Vladimir Putin, Benjamin Netanyahu and Hugo Chavez. He shared his interactions with other famous (or infamous) people, including his work tracking down and ultimately meeting and photographing exiled American Edward Snowden.
While Platon’s stories of powerful people were fascinating and entertaining, the heart of the day belonged to the panel discussions. Here is a brief look at some of the more notable discussions from Trends Day:
Economic research analyst Ali Wolf, from Meyers Research LLC, opened the day with an insightful breakdown of the trends that are shaping our economy. Wolf stated that the United States economy (which is in the longest period of economic growth on record) was “Resilient, but vulnerable.”
Wolf cited some risks that could affect the economy, like the new trade deal with China and the growing rates of government and corporate debt, but her most prophetic warning came from how she addressed the possible economic effects of the Coronavirus, which had just began to affect supply chains in the U.S.
“For you to think that the Coronavirus is not going to have some kind of economic impact, is probably wrong,” Wolf said. “Maybe this is the catalyst for the global recession everyone has been waiting for, or, maybe we get this under control. Maybe this is like SARS. Once when we stop seeing the number of cases increase, then hey, we don’t have anything to worry about. The markets will settle down and things will start getting back to normal.”
While the long-term effect on the economy is yet to be seen, the Coronavirus has had a profound effect on current day-to-day business in the U.S.
Wolf also shared some numbers that would show that the U.S. is in better shape to weather an economic slowdown. She noted that in 2005, right before the last recession, the personal savings rate in the U.S. was 2.5 percent. Now, Wolf said the personal savings rate is 8 to 8.5 percent, which means the average U.S. household has more money in reserve to get them through a down cycle.
“The increase in personal savings has held back economic grown a bit, but it is setting us up for a much softer landing when the next recession hits,” Wolf said.
Her final forecast put the chances of the U.S. entering a recession in the next 10 months at 20 percent, a number that will likely grow as the full effects of the Coronavirus are tallied by businesses across the country.
Real Estate Through the Decades
Former Arizona Gov. Fife Symington, DMB co-founder Drew Brown and Taylor Morrison Home Corporation board of directors member Anne Mariucci provided some historical perspective to the event. Moderator Maria Baier started the discussion off by asking the panelists what word that begins with C will be most common in Arizona’s economic future.
Symington said, “California. They are coming. Lots of regulations, high taxes are causing a general deterioration in the business culture there. Arizona is really just a wonderful place to live in and work in and our political structure is going to help with that.”
The word, or in this case, words that Mariucci used was Calmer Cycle. She hopes that Arizona uses its time wisely during these good economic cycles in order to come up with long-lasting solutions to issues that the state faces.
“I hope that during the time of calm, we can focus on the things that will make our market sustainable long term and focus on affordability and focus on sustainability of our natural resources long term,” Mariucci said.
Brown’s word choice was Convene. He said that Arizona is a great state, but is a small fish in the bigger economic pond. He said it is vital for companies to convene and collaborate on important issues. By doing so, Brown said that problems can be better solved and all the companies can benefit. He cited healthcare, and the drastic difference in life expectancy in the state from zip code to zip code as something companies can come together and produce real results.
“None of the institutions by themselves have the horsepower to attack that issue,” Brown said. “Collectively, they have the economic resources, with proper convening, to have our state actually make a difference in a space like that and be a leader in healthcare.”
The panel also discussed NIMBY (or, Not In My Backyard) culture and how it has had a negative effect on development. Mariucci pointed to a new trend that started in California that is combating NIMBYism. She told a story about a woman who started a YIMBY (Yes In My Backyard) movement to promote more housing developments in areas that are in desperate need of more affordable housing.
Mariucci said this group gives voice to the people who would live in these developments that are being opposed, a group that is rarely represented when projects come under fire by NIMBY factions.
Future of Commercial Development
The discussion about the Future of Commercial Development focused a lot of attention on the rise of true, mixed-use projects, which was a natural course of conversation based on the panelists, all of which have been involved in recent mixed-use developments in Arizona and beyond.
David Scholl, partner with Vintage Partners, discussed his involvement in a repositioning project in Florida that is taking a traditional mall development and added high-rise residential buildings to the lot.
Scholl said that he is seeing a shift in Arizona from forced mixed-use into well-planned, well-designed projects that have elements that the community demands.
“The thing that’s exciting about mixed-use right now, it seems like it’s a healthier objective than it used to be,” Scholl said. “Whenever you heard mixed-use being talked about in the 80s and 90s, it was a response by somebody who paid too much and they were trying to find their way out. There’s really true and economic demand for the mixed-use environment.”
The panel discussed the successes of repositioning of projects into true mixed-use areas like SkySong, Park Central and the Luhrs City Center.
A repositioning project that is just getting off the ground is the 1 South Church project in Tucson. Panelist Keri Silvyn, partner and owner of Lazarus & Silvyn, P.C., has been involved in the project, which will take the first nine floors of a 23-story tower in Downtown Tucson and convert it into a hotel.
“People are understanding that we want infill and we want to put lots of people in these spaces,” Silvyn said of these projects that turn areas that were once single-use into more functional areas. “At 1 South Church, we have a square block that was zoned for two office towers. One of those towers has been replaced by a multifamily development and now we’re adding a hospitality element to that block.”
Silvyn also echoed the feelings of Sharon Harper, president and CEO of Plaza Companies, about the importance of strong partnerships. Harper has seen the results of these partnerships at Park Central and SkySong, which just announced it was beginning work on its signature building, SkySong 6, which will be a 365,000 square foot office building on the hard corner of Scottsdale Road and McDowell.
“With a vision, with the right partners and a plan, you can really transform an area,” Harper said about SkySong, which will have 1.2 million SF of office, a hotel, apartments and retail elements at full build out. “Our partnership was with the City of Scottsdale, Arizona State University, Arizona Realty, Plaza Companies as the master developer, and Holualoa as our partner. Working together, we never lost sight of the vision.”
Another key discussion was about the rise in importance of amenities. In today’s competitive employment world, companies must go the extra step to attracting and retaining employees, something that is helped by having popular amenities. David Krumwiede, executive vice president of Lincoln Property Company, talked about his company’s new office building, the Grand 2 in Tempe. That building has a 12,000 square foot rooftop deck and a 12,000 square foot amenity center for starters.
Krumwiede said this trend isn’t likely to slow down anytime soon. In fact, he said that even industrial buildings are ramping up their implementation of amenities.
“These are employment centers now. E commerce has changed the whole face of these things,” said Krumwiede, whose company is building a 1.2 million square foot industrial development in Glendale. “It’s got every bell and whistle you can imagine. It’s got in and outdoor spaces, we’ve got outdoor barbecue areas, we’ve got spaces you can play corn hole if you want and it’s back to attraction and retention. You need to fill these spaces with a lot of people and they need to have amenities that are not dissimilar to office buildings or mixed-use projects.”
How Global Trade Impacts Arizona Growth
The key takeaway from this panel was the importance of Canada in Arizona’s economy, and how Arizona serves as a home base of sorts for Canadian companies who want to operate in Latin America.
R. Glenn Williamson, founder and CEO of the Canada Arizona Business Council, pointed out that there are more than 450 Canadian companies with operations in Arizona and it is the highest international employer in the state. Williamson feels that Mexico is the linchpin for the next growth component for the United States and Canadian companies are already positioning themselves to take advantage of that.
“Out of those 450 or so Canadian companies based here in Arizona, 80 of them operate in Mexico,” Williamson said. “The SkyBridge model, these types of things need to be amplified more. Because if you’re in Toronto or you’re in Montreal and you’re a major corporation and you want to do work in Latin America, it’s a bit of a hike. But if you have a central core or place like Arizona, where you’ve got a very strong historical backbone of community friends and you know the community and you’ve got a governor who gets it, Canadians are all coming here and then working all the way down into Latin America.”
New Market for Built Environment
As the nature of the workforce changes, where the live, work and play needs to change with it, and that was the focus of this panel. Much of the discussion centered around how the one-size-fits-all approach to building design or how spaces are designed, just doesn’t work anymore.
“I think it’s really important for a city that is as diverse as this city, you really need to build for a lot of different kinds of people and the way they live their life differently,” said Jason Schupbach, director of the Design School at the Herberger Institute for Design and the Arts at Arizona State University. “How do people use public spaces? One of the different ways you need to build is to support all of the different ways people use those spaces. Humans are incredibly diverse. As much as there may need to be a yoga space, there also needs to be a feeding or nursing area, you have to think through all of that stuff so you can build a place of belonging.”
Architect Kristina Floor, president of Floor Associates, explained how her team transformed an iconic Phoenix retail center, Uptown Plaza. Floor’s team took an out-of-date, aging corner and made it a welcoming area for patrons and neighbors to come and interact in the large outdoor courtyard on the northeast part of the property.
“The courtyard, there have been times when there were restaurants there that activated that space, but when those restaurants left, the space in that courtyard was just not inviting,” Floor said. “Vintage Partners (the developer for the Uptown Plaza renovations) was willing to reduce the square footage and increase more open space. Then it was time for what I like to call, ’Set the Table.’ What tenants should go in that space to help activate it? We really wanted to build some flexibility for the courtyard space.”
That courtyard is now busy with people coming and going to ice cream and coffee shops, as well as restaurants that surround it.
Creating a sense of community was also something that Curt Kremer, founder and managing partner at George Oliver LLC, wanted to do at his company’s project, CASA. This redevelopment project took an older office building and turned it into a space with inviting common areas, and amenities that include a concierge.
“When we found CASA, it was very tough to find your way through the building,” Kremer said. “What we fell in love with was there were two courtyards in the middle of the building that not only bring in a lot of natural light, but create these great gathering areas. We took advantage of what was kind of a disadvantage for the building at the time and we think we created authenticity through really inspired design from what was done before and really bringing it back to life.”