Research

What is the Phoenix brand?

Is Phoenix a thriving metropolitan area that offers endless educational opportunities, a healthy job market, innovative companies and an inspiring arts and culture scene? Or is it an Old West town with outdated policies and ideas? Independent of objective facts — how does the world see us? Panelists and members of the ASU Real Estate Council wrestled with these questions during a recent discussion hosted by the W. P. Carey School of Business.

2014-05-01

The Phoenix metropolitan area — often called the Valley of the Sun or simply the Valley — is home to more than 4.3 million people living in 27 incorporated cities and towns and unincorporated counties. It covers a broad geography and diverse population. But what is the “Valley of the Sun” and what is its brand – and why does this matter? Is Phoenix a thriving metropolitan where a resident has endless educational opportunities, a healthy job market with many innovative companies and an arts and culture scene to provide inspiration? Or an Old West town with outdated policies and ideas? Independent of objective facts — how are we perceived? Panelists and members of the ASU Real Estate Council wrestled with these questions during a recent discussion hosted by the W. P. Carey School of Business. Entitled “Defining the Vision of the Valley,” the event included an audience-participation, Mad Libs-style game to tease out what the group hopes to see in the Valley’s future. “We’re a young, adolescent metropolitan area — we’re gangly. We’re trying to figure out exactly what we’re going to be. We’re starting to take shape,” said Mark Stapp, director of the W. P. Carey Master of Real Estate Development program and moderator of the discussion. Stapp said a strong brand can turn a city into a destination — not just a location. Successful branding can bring in people, businesses and resources, promoting growth and positively influencing the economy. Brand recognition helps create a highly efficient economic development program and makes a city sought after. Can a metro area have a brand and if so, can the brand create an emotional connection? That connection, Stapp said, is what will attract people to the Valley, and keep them here.

Who we are not

Current perceptions of Phoenix are frequently positive, but many are outdated and inaccurate, according to the speakers. In the mid 1900’s, the Valley’s economy was driven by the “Five C’s”: cotton, cattle, citrus, climate and copper. But in recent years, many suggest, growth has been so pervasive that the state’s economic shorthand might be amended to “Five C’s and a G.” That’s no longer reality, Stapp said: “We’ve been dubbed the sprawl capital of the United States,” but that’s a misconception. The Valley has been becoming denser over the past 25 to 30 years as we mature. The Valley also suffers from broad brush assumptions. “We have allowed others to define us — I'm not sure we have a brand as much as a reputation,” Stapp said. Controversial legislative acts have attracted negative attention nationally, but “our state policies don't always reflect our local beliefs.” Phoenix is known for heat, retirees, resorts and cheap real estate. But, “these perceptions are not what we want to be nor are they reflective of our capability,” he said. Chris Camacho, executive vice president of the Greater Phoenix Economic Council, echoed Stapp’s observations, adding that the Valley has been experiencing growing pains. “Our brand is not the greatest nationally because of some of the things we’ve done to ourselves,” he said.

Where’s the investment?

Camacho’s job takes him to visit other metropolitan areas around the country and he noted that the Valley is not investing in its brand like other similar markets. “We’re not developing that soul like other markets,” he said. “We’re not raising our flag saying we’re proud to be from Phoenix.” Camacho referenced a survey of peer markets around the country and reported that the state’s STEM — science, technology, engineering and — jobs are severely underperforming by comparison. Even though job growth numbers in Arizona are strong, the reality, Camacho said, is that the majority of those jobs are low wage earning. An abundance of low wage jobs can have a negative impact on health care and doesn’t help to stimulate the economy, he said. Camacho said other markets are focusing on innovation, talent and infrastructure. “It’s those three things that drive economic health and vibrancy of a market,” he said.

Building infrastructure

A half cent sales tax in Maricopa County implemented in 1985 is dedicated to transportation and will fund the planned 303 freeway extension and the new South Mountain Freeway, explained Eric Anderson, transportation director at the Maricopa Association of Governments. But, during the poor economy of the past five or six years sales tax revenue has declined more than $100 million. And so, “the biggest challenge we have is money,” he said. Transportation in the Valley is also funded in part by a tax on gas purchases, but now that vehicles get much better gas mileage, that revenue is down 25-30 percent as well, Anderson said. Anderson’s goal is to increase highway capacity by 25 percent using new technology and better traffic applications. “We need to continue to invest in freeways as well as other forms of high-capacity transit,” he said. “If we can increase our capacity without new concrete, that’s a win-win for everybody,” he said.

Expanding the base

In addition to infrastructure, local companies already in the Valley need support, Camacho said. Large companies such as American Express, State Farm and Discover have made the Greater Phoenix area a major back office hub, but much of the support these companies need depends on the philosophy of the legislature, he said. “Every economic policy we create in the legislature should be focused on stabilizing and supporting economic expansion within base industries,” Camacho said. Involvement from those companies is also essential to a successful business environment, he said. “Major employers aren’t pushing their weight around in this market, holding the legislators accountable,” Camacho said. The disconnect between the business community and the policy makers is startling, Anderson said. “The business community here isn’t really engaged,” he said. “I don’t think it’s been nurtured enough.”

Who we want to be

To create the right brand for the Valley and get people and employers to come here, Camacho suggested increasing STEM education in K-12 schools, investing in and partnering with the universities and supporting the advanced industries in the Valley. Those steps will promote growth and “our future relies on growth,” he said. The Valley is projected to grow 96,000 people a year, Stapp said, building on its current population of about 4.3 million people, according to the U.S. Census Bureau’s 2012 data. The Valley’s population is weighted at opposite ends of the spectrum, with a large group of younger people, commonly referred to as millennials, anchoring one end and the baby boomer generation the other. Figuring out how to accommodate the different needs and wants of these groups will be crucial to the Valley’s success, Stapp said. The Valley also has a significant number of non-native residents who have allegiances elsewhere, Stapp said. Creating a sense of place and pride in the Valley within that group will make that emotional connection needed to make those transplants lifelong residents. According to the group’s Mad Libs answers, the Valley’s picturesque landscape and outdoor recreation, combined with employment opportunities and economic development are its brand and will make the Valley an ideal place to live and work. To make that a reality, the group said emphasis needs to be on quality educational opportunities, support for arts and culture and a focus on economic development. Camacho, whose answers helped write the story, said in the past five years economic policy in the state has been positive. “Economic policy-wise, this is the best five-year run we’ve had. We’re in a dramatically different position than five years ago in terms of  competitiveness,” he said. “Now we just need to build upon that and be smart about how we go about the next generation of policy.”

Commentary Real Estate