Jon Talton
Arizona Republic
May 18, 2006 12:00 AM
For the first time since the early 1990s, the center city of Phoenix is sprouting cranes, a steel signal that private capital is finally coming back. Major obstacles and unknowns face the enterprise of building a "24/7" downtown. But more than 30 major skyscrapers are being proposed in downtown and the Central Corridor. Some are little more than architectural renderings and a hope that enough condominiums can be presold to get the building financed. Some observers estimate no more than 35 percent of the many projects proposed will be built anytime soon.
But some are real, such as the 34-story 44 Monroe tower and the Summit at Copper Square, both under construction. Others have solid backing. They will eventually happen. The 10 projects shown are among the high-rise projects most likely in the next five years, based on their developers, financial strength and location in the permitting pipeline. Even some of these may not be a given if the business cycle turns down too soon. Below the cranes, smaller projects are also under construction or ready to break ground. For example, pioneering urban developer Eric Brown is preparing to start on the next phase of his Artisan Lofts project on Central Avenue at Willetta Street. Together, these represent a sea change for the central core: the critical private investment that has buoyed every successful downtown in America but had evaded Phoenix's grasp. Central Phoenix is slowly moving from land speculation to building. "There used to be little reason to live downtown," said David Wallach, developer of the $55 million Summit. "Now there's a confluence of projects, and people will have a reason." In addition to Wallach and Brown, other influential developers doing "real" projects include DFD CornoyerHedrick, the partners behind Portland Place; RED Development and Don Cardon of CityScape; and Virginia developer Al Ludicello of the Central Park East skyscraper.
The change has been long in coming. Phoenix began abandoning its downtown in the 1960s and failed to catch the wave of center-city revival that began nationally in the 1980s. Even the building boom along the Central Corridor in that decade was more suburban than urban, lacking pedestrian appeal and multi-use development. Elsewhere, downtowns were making a stunning comeback even in "road warrior" cities ringed with suburbs. Yet here, successive revival efforts, such as the sports arenas, were never quite enough to create critical mass. But a tipping point has now been reached, thanks to:
- The Valley Metro light-rail line, which will not only connect the center city to Tempe and its ASU campus and other areas but also allow residents to live, work and play along the line in distinctly urban lifestyles.
- A downtown campus for Arizona State University, which will eventually have 15,000 students along with faculty and staff.
- The biosciences campus, anchored by TGen and the University of Arizona College of Medicine, making downtown the heart of the state's most promising new industry.
- A hard-fought effort by center-city entrepreneurs and artists to establish unusual galleries and shops.
- Expansion of the Phoenix Convention Center and building of a city-financed Sheraton convention hotel.
Private developers are counting on these efforts to draw more people to the center city as residents, students, workers and customers. Rising gasoline prices and congestion won't hurt the appeal of center-city living either. Population growth in Greater Phoenix is another plus. If even a fraction of the millions in the metro area choose an urban lifestyle, it will fuel demand for years. At the same time, central-core office buildings are filling up, sparking plans for new towers. "Most people are going to be shocked at the changes of the Phoenix skyline over the next five years," said David Cavazos, deputy city manager charged with much of the center-city planning.
Still, the activity is coming relatively late in the current cycle. Some projects could be undone by rising interest rates, falling home sales or anxiety about a condo glut. Don Keuth, president of the Phoenix Community Alliance, the center-city economic-development organization, said he has been spending much of his time identifying promising projects and helping speed them through city permitting and other obstacles. "We need to get as many of these done before the window closes," Keuth said. Timing isn't the only potential obstacle.Land remains relatively expensive, and developers and contractors are facing rising costs for labor and material. Projects must also make peace with nearby residential neighborhoods and pass the height limit for Sky Harbor International Airport. Even the legal issue of "crane swing," where a construction crane must travel over adjacent properties while working on a compact site, is a new issue for Phoenix. City government is also only beginning to address the kinds of zoning and code provisions that make it easy to rehab an old building or build a business without suburban parking requirements. This is a particular barrier to the kinds of small entrepreneurs that thrive in cities such as Seattle. They lack the tens of thousands of dollars that can be needed to navigate the labyrinthine permitting process. The city is only beginning to move on this issue.
Small-business and gallery owners have other concerns, especially that they not be accidentally undermined as the city focuses on big projects such as ASU. Indeed, the big projects won't achieve their promise without the human-scaled "small stuff," such as lively streetscapes, abundant shade and easy connectivity among different urban districts.
Another challenge: Phoenix has lower incomes and educational levels than most cities with vibrant downtowns. Affluent, educated residents tend to be early adopters of an urban lifestyle.
Phoenix also lacks the major corporate headquarters that fill office towers. Some still question whether Phoenicians have much taste for urban living at all; hence most major local developers are still sitting out. Yet the market appears to be there. Conservative estimates put center-city office demand over the next decade and a half at 15 million square feet. That's 38 more buildings the size of Phelps Dodge Tower.
An additional 20,000 condos are also expected. That would require 75 more buildings the size of the Summit at Copper Square. Some don't need any convincing. The Summit's Wallach recently brought a group of Chicago developers to downtown, and they were impressed by the opportunity. I think the naysayers will come to regret that time on the sidelines.
