Scottsdale economic picture rosy but city not immune to commercial vacancy trend

Scottsdale Economic Development Director Danielle Casey delivers an update to her department’s efforts to meet the guidelines of the five-year strategic plan focused on bringing more diversified business to Scottsdale. (Independent Newsmedia/Josh Martinez)

Scottsdale Economic Development Director Danielle Casey Monday, Aug. 28 presented to city council her department’s latest efforts “to elevate, enhance and ensure Scottsdale’s sustained desirability.”

In February 2015 Scottsdale City Council engaged its economic development department into a formal five-year strategic plan derived from years of data collection involving local input from proprietors and residents alike.

Those efforts, economic development officials say, has accumulated $16.2 million in direct economic impact to the city and helped create 2,576 new jobs since February 2015.

“Our industry and employment trends since 2012 have been very significant here in Scottsdale,” Ms. Casey said in her Aug. 28 presentation. “We have seen 30 percent growth in our technology workforce, 46 percent in insurance jobs and 18 percent in the bio-life science fields. In year over year comparisons our retail and industrial vacancy rates have increased slightly 1.6 and 1.9 percent respectively.”

But Ms. Casey points out in comparison to the region Scottsdale is still maintaining a lower commercial vacancy rate comparatively speaking.

“In comparison to the overall greater Phoenix region it still maintains a lower vacancy rate at 12.4 percent versus 14.4 percent in the office arena and industrial is a little bit lower as well,” she said. “Our median home sale prices are up 4.1 percent and on our downtown alone it is 8.2 percent.”

Ms. Casey provided council with an overview of accomplishments — things like job creation, retention and outreach — over the last fiscal year, which ended Friday, June 30.

“Our marketing message was also heard far and wide and focus was given in initiatives that we believe are important to the business communities to attract and retain talent,” she said.

“In fiscal year ‘16-’17 we documented material influence in the attraction, retention or expansion of 14 unique businesses and these represent 1,019 new jobs in the first 12 months of operation with an average wage of $62,744 and overhaul total of 1,631 new jobs if you look at their plans for the next five years.”

Ms. Casey also points out while year-over-year comparisons show an up-tick to vacancy rates her department was able to fill nearly 500,000-square-feet of commercial space in the last fiscal year alone.

“The total five-year direct revenue impact of the last year’s activities was $7.5 million over a five-year period,” she said.

A view of Perimeter Gateway III, a 65,848-square-foot, two-story office building within Scottsdale city limits. (Submitted photo)

Council commercial view

Scottsdale Councilman David Smith says while commercial vacancy rates are seeing a slight increase in the local marketplace, he contends it’s more about what is filling that space than how much of it is being filled given the slight swing in percentage.

“On that particular point I didn’t think the change in occupancy was statistically significant,” he said. “We are always going to wiggle down or up. My bigger focus is not always that we are filing the office space but what we are filling it with. Are we really recruiting jobs that are going to add to the economic wellbeing of the city?”

David Smith

Councilman Smith says all indications suggest Ms. Casey and her team are going after the right fish.

“You have to be very, very selective and I think Danielle Casey and the group over there they have this down,” he said. “You want to bring in jobs that have what I will call, ‘the demographic that allows them to live here.’ You don’t just want to bring in lower-paying jobs for folks who can’t afford to live in the city.”

The vacancy rate up-tick, although slight, was something that resonated with Councilman Guy Phillips, he says.

“I feel the reason for the vacancy rate is the high amount of product left over from the last building frenzy and the following downturn,” Mr. Phillips said in an Aug. 30 statement.

Guy Phillips

“Perhaps a better explanation would have been to say of the overall vacancy since 2008, we have filled ‘X’ percent up to the present. Another reason could be less building space is required nowadays because of technology replacing the human workforce.”

But given the state of economic affairs both councilmen say Scottsdale appears to be on good footing, comparatively speaking.

“I don’t know that if there was any major takeaway — there is a comfort level that our economic recovery — whether it is measured by vacancy, retail or commercial space it seems Scottsdale is on a stronger pace than our communities around us,” Councilman Smith said.

Councilman Phillips echoed a similar sentiment.

“Her presentation was professional and its obvious we have a great economic director in Danielle Casey,” Councilman Phillips said. “The presentation overall showed that we are doing well as a city in promoting and recruiting new business and gave a positive outlook for the future.”

Small but mighty

The Scottsdale Economic Development Department turned a focus to small business training by hosting a series of workshops at the SkySong Center — The ASU Scottsdale Innovation Center, 1475 N. Scottsdale Road.

SkySong, The ASU Scottsdale Innovation Center (File photo)

“We continued our small business training series and it saw more than 160 participants, 15 direct mentoring appointments and then we had 17 volunteer instructors that came out to produce that program that was held at SkySong,” Ms. Casey said, noting an effort to aid the downtown parking conundrum.

“We know that downtown parking has been a major focus. In partnership with the transportation department, we have a parking enhancement solicitation that is nearly complete.”

Ms. Casey says her department envisions a mobile application to maybe one day help motorists find available parking spots as downtown Scottsdale continues to be a tourist destination.

“We also are exploring tools and programs for small and downtown businesses in concert with the completion of downtown 2.0,” she said. “And, we are going to collaborate with ASU on events and initiatives where we work to attract alumni back to Scottsdale.”

Councilman Smith says the art of new business attraction can sometimes be a confluence of many factors.

“There are a lot of things that makes some company locate one place or another,” he said noting the sunny landscape of the Valley of the Sun. “It is a very small impact that our economic development partner can have. We maintain an inventory of property where we can assist them in finding a site. But most companies are going to use the decision whether or not to, based on 90 percent of factors other than we can help them with — it doesn’t minimize our efforts.”

Councilman Phillips says he has experienced first-hand the efforts of the Scottsdale economic development team working to retain local businesses.

“Certainly there are companies who are looking to relocate or start up and without proper advertising and resources they wouldn’t know about Scottsdale,” he said.

“A case in point is Ranch Market, who is moving from Phoenix to Hayden and Thomas. I have worked with the Asian community and their biggest push-back to relocating or starting in Scottsdale is the cost. Our economic team has done a great job in removing this fallacy and showing through metrics that this is a great city to do business! I look forward to more Asian culture here as our economic team continues to reach out.”

Independent Newsmedia Arizona Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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