TEMPE, AZ-With Phoenix at “Ground Zero” of the housing crisis, it’s easy to point fingers at what happened to the economy and why it happened. But as the region recovers from the Great Recession and its aftermath, some experts point out that commercial real estate wasn’t exactly blameless in the situation, either.
In a recent article entitled “Going Places? Post Bust is Inflection Point for Phoenix,” published in knowWPCarey, an online newsletter issued by Arizona State University’s W.P Carey School of Business, Jack Tomasik, an economic and community development consultant in Chandler, AZ, and Mark Stapp, director of Arizona State University’s Master of Real Estate Development program, determined that the past activities of CRE development were in part, to blame, for the bust. More specifically, while the housing bust dragged down an economy based on construction, real estate developers and investors were focused on little more than closing deals, and moving to the next one. As such, there was little connection to the community in which these investors or developers were making money.
As a result, “this time there is a more widespread loss of faith in development. Construction and development alone cannot be our economic base,” Tomasik says in the article. “It was just too easy … like we were hooked on this stuff.” As a result, according to Stapp, it’s up to developers to determine the region’s future path. “Lawmakers don’t, elected officials don’t, administrative staffs don’t, neighborhoods don’t and community groups don’t build communities. Developers build communities,” he notes.
Stapp’s suggestion is that CRE developers become more “place-making” as opposed to merely building something. “The advantage of being place-making focused rather than transaction focused is that you get to control the environment,” he says, in the article. “You get to create the attractiveness. The question is, what is ‘attractive’? What is our brand, our differentiator as a place competing with others places to operate a business and live? How will we adapt to and capture value from changing demographics, rapidly evolving technology and shifting values? Together these are disruptive to the norm.”
Read more about Stapp’s and Tomasik’s comments and suggestions about development and commercial real estate prospects – and where those prospects will be in 2035 — here.