Western Real Estate Business recently spoke with economic development representatives from four different cities in the West to see what their focus is and what challenges they are currently facing. In these interesting economic times, some cities are more aggressive than others in trying to attract new business while others rely on new infrastructure improvements and efficiencies to spur growth.

Phoenix; Reno, Nevada; Colorado Springs, Colorado; and Riverside, California, have their own unique economic environments and geographic characteristics to consider regarding development. However, the common themes of economic diversification and downtown revitalization are prevalent within each city’s development program.

Phoenix, Arizona

Big projects, like the genomics research facility above, are in the economic development pipeline in Phoenix.

Revitalization and redevelopment of Phoenix’s urban core continue to be top priorities for the city’s community and economic development team. Three major projects in the city’s future herald a new era in Phoenix’s downtown development.

Phoenix’s new light-rail transit system, which starts construction in early 2004, is certain to infuse new life into the urban core. The linchpin to the city of Phoenix’s urban revitalization plans, the light-rail system is a 21-mile, $903 million project, due to be completed in late 2006.

In 2000, Phoenix voters authorized a sales tax increase in part to finance the new mass transit system. To this point, the path of the light rail has been set and the locations of the rail stations have been plotted. A big part of the planning includes what kind of development will accompany the mass transit system.

“The city is going through a planning process right now where we’re putting what’s called a transit overlay district within approximately a quarter mile of each light rail station,” says Jason Harris, program manager of Phoenix’s Central City Development Division. “It kind of redefines some of the [land] uses that are appropriate adjacent to the light-rail stations so we know where the opportunity sites are.”

Real estate developers are eager to see the results of the city’s market study that will detail the potential for transit-oriented, mixed-use development around the rail stops. John Chan, administrator of the Central City Development Division, believes most developers will approach development around the mass transit system with caution, waiting until plans for the light rail are completed and construction begins. Only then will the related opportunities for growth in downtown Phoenix come more into focus.

The light-rail system is important, if not vital, for Phoenix given that it’s one of the fastest growing metro regions in the country. The city has a population of 1.3 million with the entire Valley area eclipsing 3 million in population.

With a city-manager form of government, the municipality of Phoenix controls various resources including Civic Plaza, the major convention center in the state. According to Harris, the convention center facility, which is only 65th in size in the nation, has become inadequate for the state’s growing business needs and future convention goals. With the glaring need for a bigger facility, the city found a way, through various financing vehicles and state assistance, to raise the $600 million required for expansion of Civic Plaza, construction of which will start in 2004 and be completed in late 2008.

“[The expansion] is effectively going to double the size of the convention center,” says Harris. “One portion of the visitors’ convention center is going to be renovated. They’re building a high-rise tower portion to it and then going completely below grade to another portion and effectively doubling the size of exhibition as well as meeting space and upgrading the facility to the higher standards that are required today.”

The financial impact on the area’s service companies — suppliers, contractors and consultants — that are involved in the process will be substantial. In addition, Phoenix retailers and restaurateurs will benefit from the economic stimulus that the new Civic Plaza will supply. Also, the city’s economic development team will look to bring more hotel rooms to the area to accommodate the new influx of conventioneers visiting Phoenix.

The last major development project in Phoenix demonstrates the boldness and teamwork of the city’s economic representatives. In early 2002, the city of Phoenix’s economic development team issued a proposal to build a new genomics research facility for the National Institutes of Health’s International Genomic Consortium (IGC), which was looking for a new home. The city partnered with the state of Arizona not only to construct the state-of-the-art facility for the IGC but also to provide some of its operating revenues for the first few years. When the requirements for the project were fully realized, Maricopa County, a Native American tribe, the state’s three universities and a number of philanthropic and other foundations stepped forward with the aforementioned parties to create the necessary $134 million funding package. The urban research park will be located on 24 acres in downtown Phoenix.

“So we’re now constructing a $46 million, 170,000-square-foot project that will have genomics research — four organizations in total,” says Harris. “If anything happens in bioscience, it happens in a clustered environment where you have an abundance of researchers. That effort is being led by our department specifically. It’s just a really phenomenal story especially within the biosciences because a lot of communities are chasing this industry.”

Harris and Chan also spoke of the current state of Phoenix’s economic development. From the residential rental property in Phoenix’s urban core to its “bread-and-butter” flex industrial space in the city’s environs, the market definitely is slanted to the supply side, says Chan. Once absorption picks up, the Phoenix area will begin to see heavier development activity. Because of the status of residential rental property in the city, there has been a big push to bring in ownership housing, says Harris.

Instead of having a dedicated program for providing financial incentives to prospective companies, Phoenix’s economic development program analyzes each potential project on its own merits including the size of the development, the quality of the jobs and whether or not it will boost the area’s core industries.

For a community so growth-oriented, the city of Phoenix exhibits a unique ability to look inward and focus on urban revitalization and the improvement of its downtown with new efficiencies and opportunities. The light-rail, convention center and genomics facility projects bear that out.

Reno, Nevada

Reno, Nevada’s redevelopment agency encourages businesses to locate in the scenic Truckee River district.

The city of Reno’s redevelopment efforts involve diversifying the economic makeup of the downtown area. Everybody knows about the numerous casinos in the city’s core, but the redevelopment agency is seeking to balance that with an increased housing, retail and office presence. The area surrounding the Truckee River, which runs through downtown, offers many attractive locations for such uses. In fact, Reno’s economic development agency owns three properties along the river and is actively encouraging mixed-use development there, says Kristin Danielson, economic development manager with the city of Reno.

While the gaming industry is still vital to the overall Reno economy, there are plenty of examples of the city’s economic diversification. The brand new Nevada Museum of Art, which has drawn national attention, symbolizes Reno’s emerging arts community. Currently under construction is the first whitewater park west of Denver. When completed, kayakers will be able to paddle their way through the heart of downtown Reno. The city’s academic and medical presence is a burgeoning one. The University of Nevada plans to increase its enrollment from 15,000 to 23,000 students in the next 7 years. Washoe Medical Center forecasts employee growth of 30 percent over the next 3 years, and St. Mary’s, the other downtown hospital, has just broken ground on a multimillion-dollar expansion of its facilities.

The many attractions and areas of growth in Reno signal the cultural renaissance, as Danielson calls it, that is taking place in the city.

Construction on the Special Events Center in downtown Reno, Nevada, will begin in 2004.

Office and retail development in Reno have really taken off, especially on the south side of downtown. This is where national retail chains and the more suburban-type mall developments are springing up. Bayer Properties expects to begin construction early next year on its 200-acre lifestyle project in this area of Reno. Modeled after successful developments of the same name in the Southeast, The Summit project will offer convenient shopping with a quality mix of retail and restaurant options and landscaping that enhances the total shopping experience.

North of downtown, a surge in residential growth has boosted retail development. Some of the housing developments are accompanied by their own small neighborhood retail convenience centers, which often include grocery tenants. As is the case with other metro areas, retail developers are building projects where land is more plentiful and there are fewer restrictions to tailoring a project to fit different retail formats. However, factors unique to Reno tend to keep its development from straying too far from downtown.

“Reno is sort of a stand-alone city,” says Danielson. “The development is still going on in the city of Reno because there aren’t really suburbs around it.”

Still, the challenge remains for the economic development team to re-engage developer and company interests in locating in downtown Reno. As Danielson attests, it’s always more difficult to achieve infill development. To that end, the city of Reno’s economic development team offers a revolving loan program to businesses willing to relocate to the central business district. This Community Development Block Grant, which allows for business loans of up to $200,000 at low interest rates, is specifically designed to attract non-tourist type tenants to Reno’s core. This is all part of the effort to attract more Reno residents downtown to do their shopping and find entertainment. Danielson knows this objective will be made easier with the addition of more non-casino restaurants to go with the movie theatres that are already downtown. The new upscale housing and townhome development taking place in the south and southwest areas of downtown, and the retail to follow, will help the cause.

“I think the private market is alive and well on the south side of the downtown, where you see this new Bayer project being proposed and some other ones in the destination retail, big shopping center [market],” says Danielson about the different facets of Reno’s economic development. “[Secondly], the redevelopment agency itself is focused on the downtown. We’ve got destination gaming in the downtown, which is a regional and national draw, but we’ve also got the office sector, we’ve got residents, we’ve got people coming down to enjoy the river, coffee houses and art galleries.”

The third aspect of the area’s marketing plan is headed up by the Reno/Sparks Convention and Visitors Authority (RSCVA), which actively promotes the region. Its big marketing campaign is known as “Reno-Tahoe: America’s Adventure Place.”

“[The campaign] really kind of reflects the re-branding of Reno from the gaming destination of yesterday to the gateway to American’s adventure place — Lake Tahoe, the skiing, the golfing and all kinds of outdoor recreation things, including the kayak course that we’ve got going on in the downtown,” Danielson says.

When combined, the three different marketing components are attracting new visitors as well as new businesses to Reno. Danielson sees the results in the new development projects going on in her city and in discussions with the various company representatives from the different real estate sectors across the West. As an emerging market, Reno is on their radar screens.

“It’s really an area of great opportunity,” says Danielson. “So there are a lot of things outside of the traditional gaming that people might think about — regional medical facilities, outdoor adventure, the university, all of which are planning for a lot of expansion and growth.”

Colorado Springs, Colorado

The lessons learned from the past 15 years have taught Gary Cuddeback, Colorado Springs’s economic development director, the importance of diversification in his city. The more balanced the business makeup, the better off the area will be in weathering the inevitable economic storm. In the 1980s and early ‘90s, Colorado Springs’ economic viability was nearly 50 percent dependent upon the military and defense sectors. This heavy reliance did not prove advantageous once the federal government began a round of military base closures. Afterwards, the city’s economic development office courted technology companies including electronics, software and telecommunications firms. This plan for Colorado Springs’ economic growth achieved great results with the technological boom of the ‘90s. Of course, that all came crashing down in the last 2.5 years as the nation’s tech companies bore the brunt of the economic recession.

The results? In Colorado Springs, 8,000 primary jobs were lost in the last 2 years, 75 percent of which were in the technology sector. The economic slump and the resulting 4 percentage-point increase in the unemployment rate were enough to send Cuddeback and his associates back to the drawing board in search of more economic diversification.

Colorado Springs’ economic development director has more than just a team to work with. There’s a whole league. Cuddeback’s office, which was founded in 1990, partners with the private, non-profit Greater Colorado Springs Economic Development Corporation as well as county and state economic development offices, Pike’s Peak Community College, the University of Colorado, Pike’s Peak Workforce Center and Colorado Springs Utilities, a publicly owned entity.

“We were able to pull together resources within the area and achieve some really good economic growth in the ‘90s,” says Cuddeback. “Now we’re using the same organizations to try to stimulate a recovery and it’s a challenge right now.”

Part of those efforts include the new business retention and expansion program. Economic development representatives and locally elected officials visit local companies to better understand their industries and the particular economic issues they deal with. A number of task forces of industry leaders are being formed to provide input into the city’s economic strategy. The goal is to better serve the companies already in Colorado Springs but also to deliver what the new industry players want in order to attract them to the area.

Unlike the technology sector, retail development has not slowed a bit in Colorado Springs. The first phase of The Shops at Briargate, a Poag & McEwen lifestyle center, recently opened on the northwest side of town adjacent to Interstate 25. Cuddeback calls it a significant real estate investment in the community because of the kind of retail options it provides Colorado Springs’ consumers.

“From our point of view, it will reduce what you would call economic leakage — leakage of the expenditures and tax base to the Denver area — because people will not have to drive to Denver to go to places like P.F. Chang’s or the Pottery Barn,” he says.

Terry McEwen, president of Poag & McEwen Lifestyle Centers, agrees: “Colorado Springs is a great market, a nice, affluent market. [However], it did not have any quality retail. We saw a void in the market just as customers saw a void and would travel to Denver for quality retail.”

Today, retail options abound in Colorado Springs, especially on the east side. The Powers Boulevard corridor has become the “new mecca” of retail, according to Cuddeback. Powers Boulevard, the major north-south thoroughfare on the east side of town, has seen its fair share of residential development as well.

The Shops at Briargate and the Powers Boulevard development were privately driven, whereas the city’s economic development team focuses more on attracting and growing the primary employers, whether they be manufacturing firms or other major companies. “To the extent that we provide incentives, we provide them to those organizations, to those primary companies, who then create the jobs [which] translate into shoppers and those shoppers attract the retail organizations,” Cuddeback says.

With recent developments in Colorado Springs’ core business sectors, there is reason for a more positive economic outlook. A fair amount of growth has taken place in the defense sector recently as suggested by the announcement that Northcom is to be headquartered in the city. Lockheed Martin, the leading defense company in Colorado Springs, employs around 2,200 people. Office operations are picking up, too, with Progressive Insurance, the fourth largest insurer in the United States, building a large campus on the north side. The Northcom and Progressive developments could mean more than 1,500 new jobs for Colorado Springs. There is still a substantial technology presence in Colorado Springs with Hewlett Packard, MCI and Intel accounting for nearly 6,000 local jobs. Intel’s 500,000-square-foot facility leaves the company plenty of room for growth.

Cuddeback says that downtown is starting to see a lot of infill residential development — something not seen in the ‘90s — including several loft and apartment conversion projects. The biggest redevelopment plans in downtown Colorado Springs focus on Confluence Park, a 10-acre park under construction in the southwest part of the city. Although still in the proposal stage, plans for the entire urban renewal area include residential development surrounding the park, with a convention center and a new baseball stadium, for the Triple-A Colorado Springs Sky Sox, in the vicinity. A project called the Palmer Center would add lofts, condominiums and retail.

Colorado Springs’ economic team views the southeast/airport area as a significant employment center in the future. The economic development partners are in the final phases of developing a master plan for the development of a 500-acre business park at the airport. When constructed, the city-owned property will be home to aircraft-related companies as well as other firms wishing to take advantage of the close proximity to the airport.

“This will be a very large expansion… and we hope to have that available by the first half of next year,” says Cuddeback. “We’ll do long-term leases for companies and developers that are interested in building out there.”

Despite the economic challenges, some things never change for Colorado Springs. This city of nearly 600,000 people remains a family-oriented, outdoor-appreciative community. According to Cuddeback, once employees locate here, they really find it hard to leave. In fact, a number of people who lost their jobs in the technology field have remained largely because of the sense of community and the immense beauty of the city located at the foot of Pike’s Peak.

Riverside, California

Riverside, California, is located in the fastest-growing area of the state.

Much of Riverside, California’s economic development plan addresses the fact that, historically, as much as one-third of its population commutes outside the county for employment. From that reality came the economic emphasis on developing a variety of jobs locally.

“Riverside is, of course, one of the fastest growing regions in the country, making our work that much more important,” says Michael Beck, the deputy city manager of Riverside. “The focus specifically has been to make sure we have a diverse economy… so that we’re not dependent on any individual industry or bump associated with that [industry].”

To that end, Beck’s economic development team has focused on technology-oriented and knowledge-intensive trades while leveraging the resources of the four colleges and universities that are located in the city. The goal of diversifying the city’s economy traces back to the early 1990s when significant cuts were made in the defense industry. Like most of Southern California, the city of Riverside, with its large defense-related companies, took a significant economic hit. Since that time, the city’s population has grown by more than 21 percent. From an economic development perspective, Beck and his colleagues realize that Riverside’s growth carries with it both a sense of opportunity and responsibility.

True to its economic balance objectives, the city is experiencing significant development at Riverside Regional Technology Park, also known as the Hunter Park industrial area, which is located near the Interstate 215 and Interstate 60 interchange on the northeast side of the city. The park includes substantial industrial, manufacturing, technology and research-oriented office developments.

“What we started there with the cooperation of the county of Riverside and the University of California at Riverside (UCR) was the University Research Park and it is primarily focused around 11 parcels within the Riverside Regional Technology Park,” says Beck.

Once current construction is complete, the Riverside economic development team will have four buildings in the park, all of which are “tech-flex” facilities ranging from 12,000 to 25,000 square feet. An analytical laboratory and pharmaceutical company are two of the firms occupying the newest research park facility. Offshoots of UCR and Loma Linda University, the two companies, and four other firms set to occupy the building currently under construction in the park, are prime examples of the strong ties between Riverside’s economic development plan and the city’s intellectual base.

“What we’re really starting to see grow is the seed we planted with both UCR and Loma Linda [University], which was really focusing on biotechnology growth, a new industry for not just Riverside but the Inland Empire,” says Beck. “That was a specific area where we wanted to make sure that we had facilities and an intellectual environment that supported the local spin-offs, including trying to work with equity partners to make sure that they could be viable here.”

Riverside’s scientific and technological trades aren’t the only booming businesses. Due to the city’s tremendous residential growth, Riverside provides ample opportunities for retailers. Mission Grove, a burgeoning residential community on Riverside’s eastern edge, has sprouted many different retail destinations to cater to the growing demand. Kohl’s, which opened 28 California stores on a single day earlier this year, originally projected its Riverside store in Mission Grove to be among the more modest units in sales performance. During the entire opening 2- or 3-week period, it ranked in the top 2 in the state.

“It has actually maintained that strength today because the market is just so deep with the number of new families moving in and also because Riverside is a relatively young city,” says Beck.

In central Riverside, Westminster Capital LLC is demolishing and completely rebuilding Riverside Plaza, which has been dark for around 10 years. It will have a new Trader Joe’s, Sav-On, a new theater, Islands and several other new restaurants. General Growth Properties is expanding The Galleria at Tyler, a mega-regional mall in Riverside that has experienced significant retail growth with new national chains like Sports Chalet and Bed Bath & Beyond setting up shop nearby. In Canyon Springs, adjacent to Moreno Valley, impressive retail growth has taken place including a new SuperTarget, Best Buy, Michaels and Sam’s Club. A new Wal-Mart Supercenter is in the proposal stage.

“You’re now starting to see redundant retailers… because the city is relatively large in size and population and due to the fact that it’s a retail destination for surrounding communities — Moreno Valley, Corona, Norco, Perris and Grand Terrace,” says Beck.

A key focus for Riverside’s economic development centers on the continued revitalization and redevelopment of the downtown area. New high-density, single-family housing has been completed recently on the edge of Riverside’s urban core. Only 9 out of the 64 detached-home units were available a week after they were put up for sale. Other downtown projects that are underway or in the planning stages include the 300,000-square-foot mixed-use development called The Villaggio, proposed by The Alan Mruvka Company; a high-end condo, office, retail and entertainment project to be located on Mission Inn Avenue; and Gateway Corporate Center, which will offer 90,000 square feet of garden office space when completed.

“We either have under construction or plan to begin construction in the next 12 to 18 months more than 400,000 square feet of office — new office in the downtown that hasn’t seen new office development in 15 years,” Beck says.

Riverside’s economic development agency uses one of the most proactive incentive programs in the region to attract companies to the area and maintain a healthy, attractive business base. The city was recently cited by Site Selection Magazine for its innovative programs, leadership and customer service. The award saluted the city’s success in attracting $160.7 million of new investment and 1,224 new jobs in 2002. Riverside’s redevelopment agency provides assistance through loans, grants and other incentives so that companies can finance such things as building-façade improvements.

“One of the things that we’ve been very successful at over the last 2 years is promoting the utility advantage,” says Beck, whose team brought in about a dozen companies last year on what’s called the economic development rate, a 4-year graduated utility discount. “Riverside does have its own public utility and in some cases we’re more than 60 percent less expensive than private-owned utilities or investor-owned utilities. That has been a real opportunity for us.”

Riverside’s progressive economic approach doesn’t end there. Beck’s team also offers workforce incentives, industrial development bond financing, enterprise zones and recycling programs to ensure the city’s balanced growth. One need only look at the numbers to see that the plan is working.

©2003 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.