COVER STORY, JUNE 2004

CITIES ON THE MOVE
Western economic development teams court quantity without abandoning quality.
Brian A. Lee

All across the West — from Tacoma, Washington to Las Cruces, New Mexico — there are exciting real estate and economic development opportunities. From small-shop tenants to large commercial developers, different real estate entities are constantly in motion in an attempt to capitalize on the next hot trend or simply to take advantage of tax incentives, infrastructure improvements or various city development offers. Western Real Estate Business recently tapped into this progressive flow to explore what western cities are doing to grow business.

Tacoma, Washington

Easily accessible by road, rail, air and water, Tacoma, Washington, is ready for the attention its new arts and business facilities will bring.

Shedding the reputation as Seattle’s industrial stepsister, Tacoma has experienced an arts renaissance. The Tacoma Art Museum drew more than 17,000 visitors in the first month after its 2003 reopening in a new $25 million home. Not to be overlooked, the $63 million Museum of Glass: International Center for Contemporary Arts opened nearby.

Slated to open in November, the Tacoma Convention & Trade Center will be a big business draw to the downtown. The $94.7 million, 240,000-square-foot convention facility will feature a unique top-floor exhibition hall and a sweeping view of the city. On-site hotel and parking components will help to maximize the convenience and comfort of the center’s visitors.

In keeping with the convenience theme, the South Tacoma Station is one of 14 stations planned for Sound Transit’s Sounder commuter rail. When complete, the Sounder tracks will create an 82-mile corridor between Everett, Seattle, Tacoma and Lakewood, Washington. Commuters will have access to 18 daily passenger trains.

The city of Tacoma Economic Development Department focuses primarily on attracting tourists, retailers, private investment and residential development to the downtown area. To that end, it promotes Tacoma’s distinctive character and cultural/recreational opportunities by increasing artistic themes in neighborhoods and business districts; working to attract businesses that cater to conventioneers, tourists and residents; and advancing Tacoma’s historic districts and landmarks as destinations for visitors.

“Our geographic location offers close proximity to ports and major airports, while our cost of living remains low compared to other Northwest cities,” says Martha Anderson, acting director of the city of Tacoma Economic Development Department. Tacoma’s 2003 population of 196,300 makes it the third largest city in the state but average home prices are 45 percent less than that of Seattle, according to the Fall 2003 Central Puget Sound Real Estate Report.

If Tacoma’s port, airport and interstate access weren’t enough for prospective businesses and residents, a part of the city was recently designated a federal renewal community. HUD Renewal Community (RC) Tax Incentives for qualifying business and/or employees in the zone include wage credits, a commercial revitalization deduction and zero percent capital gain on RC assets. “Additionally, Tacoma places great importance on preserving the city’s historic buildings and offers tax credit to those interested in rehabilitating historic properties,” says Anderson. The Federal Historic Preservation Investment Tax Credit is available for qualifying buildings 50 years or older.

Gilbert, Arizona

Gilbert, Arizona’s charming Heritage District, at the center of downtown, is the focus of the city’s redevelopment efforts.

In Gilbert, retail follows rooftops — en masse. With an annual growth rate of 22.8 percent, Gilbert is expected to double its population of 160,000 by 2020. In the next 2 years, three major retail developments — Gilbert Gateway Towne Center, Crossroads Towne Center and Santan Village — will open to serve the booming population.

“Together, these projects will more than double Gilbert’s retail inventory, raising it to approximately 3.5 million square feet,” says Gregory Tilque, director of economic development for the town of Gilbert. “Because Gilbert has the highest median household income of all working Phoenix communities – which translates into an annual buying power of $2.4 billion – it is a boon for all types of retailers.”

Gilbert Gateway Towne Center, an 800,000-square-foot Vestar Development project to be completed in March 2005, will have one of Arizona’s first two Super Target stores. Crossroads Towne Center, another Vestar development, will be home to the state’s second Super Target location. Nearly half of the 1.3 million-square-foot Crossroads Towne Center, scheduled for completion in March 2005, will be located in Gilbert. More than 1 million square feet in size, Westcor Development’s Santan Village features an approximately 200,000-square-foot Wal-Mart Supercenter. The two-phase project is scheduled for completion in August 2005.

With an average age of 30.1 years, Gilbert’s employee pool enables other commercial real estate sectors to flourish as well. In the next 2 years, the Santan Motorplex and Mercy Gilbert Medical Center will be built in the 1,400-acre Spectrum master-planned, mixed-use community. Santan Motorplex will be the largest autoplex in the state and is expected to be the town’s greatest generator of sales tax revenue. Mercy Gilbert Medical Center is projected to create 1,000 new jobs.

The impending completion of the Santan Freeway, part of the freeway loop around the Southeast Valley, has turned acres of undeveloped land in Gilbert into prime freeway-fronting commercial opportunities. Each of the five projects mentioned previously are situated along this corridor. “A large portion of this land remains available to those who move quickly,” says Tilque. The economic development team will work to ensure that roadways connecting to the freeway are able to accommodate the unprecedented commercial growth taking place along the corridor.

The Heritage District, the center of the original downtown Gilbert, is the focus of the town’s redevelopment efforts. The charm of the area and its unique shops, restaurants and businesses strike an effective balance with the large-scale commercial growth of the Santan corridor. Town requests for project proposals are coinciding with major redevelopment improvements including the installation of new vintage model street lamps, appointments like benches, and informational and directional kiosks.

Gilbert officials do more than take project proposals. Programs like P.E.R.T. — “Partners Experiencing Results Together” — are examples of the proactive nature of the town’s economic development approach. P.E.R.T. is designed to strengthen communication between town representatives and commercial developers during the project plan review and permitting process.

Las Cruces, New Mexico

Las Cruces and Dona Ana County, New Mexico, have many economic development reasons to smile. The city attracts young and old alike whether for education — New Mexico State University has an enrollment of approximately 24,000 students — or retirement — Money magazine ranked it one of the top places in America in which to retire. The county population of nearly 260,000 makes it the second most populated county in New Mexico and an attractive home for prospective businesses.

“We continue to focus on the creation of higher-paying jobs,” says Capri Chapman, business development manager of the Mesilla Valley Economic Development Alliance, a partnership that serves both Las Cruces and Dona Ana County. “We’ll also grow economically by improving the levels of the community’s aesthetics — roads, historical areas and downtown revitalization.”

The Mesilla Valley Economic Development Alliance primarily targets the food-processing, maquila manufacturing/logistics, business/finance and high-tech/aerospace industries. Job training incentive programs, highway tax incentives, industrial revenue bond financing and the third lowest property tax in the state help the partnership to attract businesses to the area.

“We are making good progress in our relationship marketing efforts with location consultants,” says Chapman. “The focus of conversation has evolved from explaining where the Mesilla Valley is to talking specifically about this region’s ability to meet the needs of projects the consultants are handling.”

Three significant building announcements prove that more and more people are taking notice of the area’s opportunities and appeal. Monarch Litho, the nation’s largest minority-owned printing company, recently announced plans to build a 225,000-square-foot facility in Santa Teresa, New Mexico, in the southern part of Dona Ana County near the Mexican border. Monarch Litho, which does printing work for Hallmark Cards and Coors Brewing Company, will invest $41 million in the project. “Co-owners George and Robert Lopez received the unanimous support of the Dona Ana County Board of Commissioners for an inducement resolution for industrial revenue bonds to begin construction,” says Chapman.

In Las Cruces, Ernest Health Inc. recently announced the construction of the $40 million Rehabilitation Hospital of Southern New Mexico, which will provide 150 high-paying jobs with benefits. “Ernest’s timeline was tight to begin with and was made more challenging by the fact that the Las Cruces facility will be the first hospital for this recently capitalized corporation,” says Chapman. “Ernest Health Inc.’s CEO Darby Brockett recognized the very good work of the city of Las Cruces in expediting development and infrastructure review for the project. He said that they hope to have as good of support from other communities for future facilities.” The 40-bed hospital will treat patients who have had strokes, heart surgery and other physical problems.

Also, Swedish appliance maker Electolux AB announced its plans to build a refrigerator factory in Ciudad Juarez, just across the Mexican border. Chapman maintains that the new 1.5 million-square-foot facility, which is projected to employ about 3,000 people, will attract Electrolux suppliers, many of which will consider relocation sites in Dona Ana County.

Oakland, California

Preservation Park in Oakland, California, is a collection of restored Victorian homes housing nonprofit organizations.

Oakland’s economic development strategy focuses primarily on the food processing and distribution, multimedia and publishing, environmental technology, computer technology and telecommunications and bioscience industries. Other development priorities include transportation, construction, hospitality, retail, arts and culture, and entertainment.

Retailers are gobbling up prime opportunities in Oakland. In July, The Home Depot will open a 125,000-square-foot store in the city’s Fruitvale District. SIMEON Commercial Properties and Cherokee Investment Partners will unveil the 250,000-square-foot Hegenberger Gateway Center at the end of the year. Anchored by a 147,000-square-foot Wal-Mart, the $40 million retail center will produce more than 700 new jobs. Whole Foods Market’s move to the Adams Point neighborhood in 2005 means not only a new retail presence in Oakland but the preservation of the historic façade of the Cox Cadillac building.

From a tactical standpoint, Oakland’s business development staff maintains a presence at ICSC deal-making events across the West, solicits target retailers for identified properties and hosts an annual development summit to facilitate infill housing and mixed-use transactions on the part of property owners and developers.

On the residential side, the 10K Downtown Housing Initiative was implemented in 1999 to attract 10,000 new residents to downtown Oakland by fostering the development of 6,000 market-rate housing units. “As of spring 2004, nearly 5,000 new housing units have been built in downtown Oakland,” says Bill Lambert, economic development manager for the city of Oakland, which has a total population exceeding 425,000. In historic Old Oakland, the 102-condo-unit Housewives Market Phase I will help achieve the initiative’s goal upon completion in summer 2005. Scheduled for completion later this summer, Mandela Gateway Gardens is a $52 million mixed-use project featuring 168 affordable rental units. It is viewed as a catalyst project for further development in west Oakland. In addition, Signature Properties’ Landmark Place has delivered 92 market-rate condo units to the marketplace.

Each year, the city of Oakland’s Business Development Office seeks to attract 13 major new businesses, including four retail, four industrial, four office and one entertainment firm; retain and/or expand 100 businesses through outreach efforts; and save or create 1,000 jobs. Oakland’s central location within the greater San Francisco Bay area, its available and affordable real estate relative to neighboring cities, and a highly educated workforce help it to achieve these business development goals.

Henderson, Nevada

Green Valley Corporate Center South and The District at Green Valley Ranch, both developed by American Nevada Company, are two of Henderson’s major developments. Just opened in April, the $85 million The District comprises 400,000 square feet of metropolitan mixed-use offerings, including 40 retail stores, a three-story Class A office building and 88 apartments. Corporate Center South is an 85-acre master-planned office park located on Paseo Verde Parkway adjacent to Interstate 215.

Henderson’s development momentum and proximity to Las Vegas have the city’s economic development team well ahead of the game in its efforts to recruit and retain business as well as foster start-ups. But there’s more.

“Henderson offers an outstanding business environment with one of the lowest tax systems in the nation, featuring no state, corporate, income or personal income tax and workers’ compensation rates that are as much as 60 percent lower than those found in California,” says Bob Cooper, economic development manager for the city of Henderson, which is home to approximately 225,000 people. Prospective businesses cannot help but be intrigued by the Las Vegas area’s robust economy, the available workforce and the opportunity to serve a population base that is rapidly approaching 2 million people.

A 6,900-acre master-planned community is planned for West Henderson. Development will include approximately 24,000 homes on 4,200 acres, 2,200 acres of commercial and light industrial property, and 1,500 acres of schools, parks and other public uses. The nearby Henderson Executive Airport is scheduled to undergo more than $25 million in renovations.

Henderson’s economic development program puts particular emphasis on fostering growth in the medical and biomedical services industries. Anchored by St. Rose Dominican Hospital Siena Campus and HealthSouth Rehabilitation Hospital, Henderson’s mediplex area is showing dynamic growth. Major medical/business office parks that have opened recently include Pacific Seven Hills Business, Pageantry Horizon Park, South Pointe Plaza and St. Rose Medical and Business Park.

Henderson’s redevelopment focus centers on increasing the population density and providing a greater variety of mixed-use projects in the downtown, expanding the downtown public art program, and facilitating stronger neighborhoods through various outreach efforts.

“We’re targeting our efforts to niche businesses including arts and culture, quality housing, specialty retail and convenience retail,” says Robert Ryan, manager of the Henderson Redevelopment Agency.

To that end, Nevada HAND is redeveloping a downtown multifamily site into Pacific Pines, the first phase of which will be a 100-unit apartment complex marketed to seniors.

In the planning stages is Parkline Lofts, a west side 48-unit condominium redevelopment project with units ranging in size from 800 to 1,680 square feet. Construction is scheduled to be complete within the next year.

Palm Springs, California

The city of Palm Springs’ economic development focus centers on retail and jobs. It fosters retail development to provide shopping options for residents and visitors as well as boost additional tax revenue. The city courts light industrial/manufacturing and high-tech/office companies to provide higher-paying jobs for its residents.

Rothbart Development plans to build Destination Ramon, a 275,000-square-foot retail shopping center anchored by a Wal-Mart Supercenter, which could generate upwards of $82 million in new retail sales. Across the street will be the 430,213-square-foot Springs Shopping Center, which will be completed in fall 2007.

The expansion and reconfiguration of the Palm Springs Convention Center will be completed by September 2005. The new entrance will face west towards downtown and the recently completed $90 million Spa Resort Casino. Also of note is the Palm Springs Classic, a massive development which will feature an 18-hole championship golf course, 450-unit resort hotel and 1,450 residential units.

Quality of life and the proximity to Los Angeles, Orange, Riverside and San Diego counties are significant reasons why people and businesses relocate to Palm Springs. “The city’s platinum name, mid-century architecture, international airport and convention center draw more than 1.3 millions visitors from around the world each year,” says Cathy Van Horn, economic development and public art administrator for the city of Palm Springs. Palm Springs’ permanent population is 43,800 with a seasonal influx of 30,000 more people.

The city of Palm Springs works closely with the Palm Springs Economic Development Corporation and the Agua Caliente Band of Cahuilla Indians to promote the city and its various development opportunities.

©2004 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.