Mike Sunnucks Senior Reporter-Phoenix Business Journal UPDATED: Dec 30, 2014, 7:43am MST
Here are my predictions for 2015.
Tempe’s building boom: There’s no way all the planned developments and proposed hotels in Tempe are going to get built. The Monti’s and Flour Mill redevelopments, USA Place, TrendEx Holdings’ $1.2 billion proposed project on Tempe Town Lake coupled with Arizona State University’s development district are all poised to add millions of square feet of commercial space to the Valley’s real estate market. There are also several hotels proposed in and around Mill Avenue.
The proposed new space is far more than the whole region — or even the whole state of Arizona — absorbs annually.
Tempe is the tightest office market in the Valley, and there is and will be demand for space especially near ASU and the Metrolight rail line. It’s just a race to see which developments and hotels happen and which will never get built.
Apartment bubble: At some point, the Phoenix area is going to hit a tipping point with new apartment development. There have been scores of new units coming on the market in recent years geared towards millennials and all those folks who can’t qualify for mortgages because of foreclosures and poor credit.
There is demand for apartments. But just like with other developers there are going to be too many new units chasing too few tenants pretty soon. There are plenty of rental homes in the Valley for families who still prefer a single-family home to apartment living.
There may also be some long-term buyers remorse region wide for approving so many apartment developments on properties that might have had commercial uses in the future.
Sin and reverse Robin Hoodtaxes: The Republican-controlled Arizona Legislature and new Republican Gov. Doug Duceyface some tough budget decisions next year and need to solve some big shortfalls. Republicans at the State Capital aren’t likely to increase income or business taxes and will be resistant to pull back on business taxes going into action.
But they will look more favorably on consumption and sin taxes that might help solve big budget deficits. That might includes taxes on marijuana if it is legalized in 2016 and sales taxes. Consumption taxes hit lower incomes more than the wealthy. But those poor folks aren’t Republican voters or don’t have lobbyists pushing their cause. Ducey fought against an extension of a temporary sales tax in 2012 so don’t expect him to lead the charge. But there could other Republicans pondering the idea of platable tax hikes.
The state might also again looking at cutting services and government programs that help the poor in order to solve new budget troubles.
Ducey on business: Expect incoming Gov. Doug Duceyto make business attraction one of his centerpieces during his first year in office. Ducey is the former CEO of Cold Stone Creamery and he will come the state’s economic developer-in chief. The new governor may also find himself more comfortable courting jobs and business investment than wrestling with legislators at the Legislature. Ducey will also be more image conscious for a state hurt by Senate Bills 1070 and 1062.
Limited improvements to housing market: The Valley’s housing market is slow and it will take a while for that to change. But 2015, especially the latter half, will be an improvement on this year unless mortgage qualifications and interest rates strangle demand. California and other states are seeing housing improvements. More home sales and improved equity could free up more people to sell and move to new places, such as Arizona.
Downtown West Valley: It is not happening overnight but the Westgate area of Glendale is slowly becoming the employment and commercial hub of the West Valley. The Tohono O’odham Nation’s new casino will open next year and the Westgate Entertainment District has stable ownership (iStar Financial) and customer traffic thanks to the Tanger Outlets. If Glendale can avoid sketchy developers and bad deals like the one for the Camelback Ranch baseball stadium, the area will slowly gain more jobs beyond bars, restaurants and retail.
The area still has to compete with other West Valley developments and will never be Scottsdale. But it will continue to attract interests and businesses.
Arms race at Indian casinos: The aforementioned Tohono O’odham Nation casino is getting built in Glendale. That will put competitive pressures on casinos run by the Gila River Indian Community and Salt River Pima Maricopa Indian Community. Those tribes are already diversifying their economic bases beyond gaming with retail, hotels, tourism and a Cactus League ballpark. The GRIC now have the naming right to the Gila River Arena in Glendale. US Airways Center will be renamed Talking Stick Resort Arena after the Salt River tribe’s new hotel.
They are also getting faster at approving projects. Look for all three tribes to up their economic bets next year.
Women dominate economic development efforts: Expect to see Christine Mackayto make impact next year as the new economic development director in Phoenix. Mackay was at Chandler before moving to Phoenix. She has some new ideas to fill empty offices on Central Avenue and get Phoenix into the hunt for more high-tech jobs.
Mackay joins an increasingly strong cadre of women economic developers in the Valley. That includes Danielle Casey in Scottsdale, Sandra Watson at the Arizona Commerce Authority and Westmarc CEO Michelle Rider has taken an economic development job with the city of Goodyear.
Opponent for Bill Montgomery: The Maricopa County attorney dropped all but one fraud charge in the Green Acre dog boarding business case. Twenty-one dogs died at the pet boarding business in June in a case involving U.S. Sen. Jeff Flake‘s son and daughter-in-law. Montgomery also did not pursue any charges in the Fiesta Bowl scandal. Expect to see a 2016 opponent to emerge next year to take on the Republican prosecutor. The 2016 elections could be an opportunity for Democrats in red-state Arizona with Hillary Clintonas a potential presidential candidate and marijuana legalization possibly on the ballot.
It will rain the weekend of Super Bowl XLIX. Maybe it’s just bad karma for Ray Rice of Senate Bills 1070 or 1062.
Otherwise, the big game could be an even bigger boon for the NFL. The Glendale Super Bowl could feature teams with national followings such as the Cowboys, Seahawks, Packers, Steelers, Broncos or Patriots.
Still, holding more events in downtown Phoenix and a successful hosting of game at UOP Stadium could put Phoenix in a more permanent rotation for the big game. Seattle will beat New England, but we’re just hoping to see Nicki Minaj and Kim K. Minaj is my pick for the big secret act at the VIP DirecTV concert in Glendale the night before Super Bowl XLIX.
Mike Sunnucks writes about residential and commercial real estate, government, law, sports business and workplace issues.
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