The Phoenix City Council an ordinance late last month that requires wage rates for construction workers on city projects to align with the U.S. Department of Labor’s determined wage for the region rather than contractors and their workers agreeing upon wages and benefits, establishing civil penalties for non-compliance by businesses and creating legal and budgetary risks for the city. 

Councilmembers Carlos Garcia (District 8), Laura Pastor (District 4) and Betty Guardado (District 5) wrote a to City Manager Jeff Barton last month calling for a special meeting to consider a proposed prevailing wage ordinance, claiming that the increased wages will help attract skilled labor and support middle class workers. The letter gave the other councilmembers just one day’s notice to decide how to vote on the ordinance in a meeting held the very next day, where additional amendments were considered on the spot without collaboration or consultation with the affected construction industry or city staff.

During the vote, outgoing Councilmember Sal DiCiccio (District 6) raised eyebrows when he broke ranks from his conservative colleagues and voted in support of the ordinance, providing the decisive vote to pass the measure. 

Despite Barton’s warning that that ordinance would cost the city tens of millions of dollars in unbudgeted construction costs, DiCiccio said he sided with the progressives on the council because the ordinance “requires developers that receive subsidies from the city to pay their employees the increased wages.” Striking an anti-business, populist tone, DiCiccio said, big business is waging “a war on the working class.”

Phoenix Mayor Kate Gallego voted against the ordinance and lambasted the council members for forcing a vote on such an important issue that raises budgetary concerns for the city, arguing that ramming a vote through the council without review from their own legal counsel  “is a terrible way to do public policy.” 

The new ordinance may cost the city an estimated $93 million that neither the city council nor the city manager has planned or prepared for. Barton estimates that the city will have to pay workers up to 30% more than what the city budgeted for on construction projects that cost over $250,000.

By causing dramatic labor cost increases, the ordinance may force the city to prioritize certain projects and cancel others that all could have been completed within the current budget, inadvertently decreasing the number of construction workers paid by the city and depriving Phoenix residents of projects that will improve their neighborhoods and public spaces.

As reported by Axios, construction companies and their advocates are already gearing up to sue the city, citing state that they argue prohibits cities from implementing prevailing wage ordinances.

A letter from Arizona ˿����Ƶ of Commerce & Industry President and CEO Danny Seiden to the council members also raised the likelihood of a legal challenge.

“It was clear in the meeting the proposed ordinance had not gone through the standard review by your own legal counsel, nor were any stakeholders consulted in the process.

In light of the Council’s apparent approval of the ordinance, I write again to remind you that the ordinance is an ultra vires action, that subjects the City to litigation and ultimately attorneys’ fees awards to any prevailing parties,” Seiden wrote.

Proponents DiCiccio and Garcia are both leaving the council this month – DiCiccio due to term limits and Garcia for his loss to Kesha Hodge Washington in last month’s election. Kevin Robinson will take the District 6 seat after defeating DiCiccio’s handpicked successor and former chief of staff Sam Stone.

Tempe is now considering in Phoenix’s footsteps by passing its own prevailing wage ordinance, with Councilmember Randy Keating leading the charge.

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Diamondbacks baseball is back, with the home opener at Chase Field tomorrow night. The club split its four-game season series opener against the Dodgers in Los Angeles, and then split a two-game set against the Padres in San Diego before heading home.

Roster update

The big out of Spring Training last month was the long-term contract extension to keep Outfielder Corbin Carroll in Arizona. Carroll, who made his MLB debut last year at just age 22, signed an eight-year, $111 million contract with a ninth year club option. He made quite the impact last year, hitting four home runs and batting in 14 runners in only 32 games while also being considered one of the fastest players in the league.

Earlier in the , the D-Backs were able to avoid arbitration for starting pitcher Zac Gallen by offering him a one-year, $6.5 million contract, maintaining control of the club’s ace and this year’s opening day starter. Other notable signings include veteran 3B Evan Longoria and a trade that netted LF Lourdes Gurriel Jr from Toronto.

New rules

This year, the MLB has made some of the biggest rule the game has seen in decades. The new pitch clock gives pitchers just 15 seconds to begin their motion when no one is on base. This was implemented to shorten the time of games, addressing one of the game’s longest standing complaints. The defensive shift has also been banned in the hope that it will generate more offense. The new rule requires teams to have two infielders on either side of second base and cannot begin a play in the outfield grass. Finally, the size of bases has increased from 15 to 18 inches. The league’s goal with the bases is twofold: Increase base stealing by marginally decreasing the space between bases and decrease player contact at bases leading to injuries.

MLB’s most affordable ballpark to see a game

According to Team Marketing , D-Backs games have been the most affordable to attend for the last 14 consecutive years. The Fan Cost Index totals the ticket price along with “beer per ounce, parking, and hot dogs.” 

In 2022, the average D-Backs ticket cost just over $22, while the average ticket league wide cost almost $36. Unlike most other ballparks, fans are still allowed to bring their own food and water into Chase Field, which keeps costs down for families and groups.

“The affordability for us is a point of pride,” Diamondbacks President and CEO Derrick Hall said. “We want to make sure that anything we do, it’s still affordable so people have a reason to come back.”

Chase Field partnerships

The APS Solar , a public-private partnership built in 2011, provides shade for fans at the western entrance and ticket booths. The 17,000-square-foot structure also generates 75 kilowatts of solar power, enough to power up to homes. 

Last year, Chase Field a brand new two-story entertainment venue that contains a retail location for one of the team’s marquee sponsors Caesars Sportsbook and Guy Fieri’s DTPHX Kitchen + Bar adjacent to the stadium. This first-of-its-kind combination is the largest freestanding sportsbook to open in partnership with a sports venue nationwide.

Community impact

The Arizona Diamondbacks Foundation, which was formed before the club even started playing, has over $75 million to local charities and nonprofits. The Foundation, whose slogan is “D-Backs Give Back,” focuses on three primary areas: youth sports and education, homelessness, and healthcare.

At each and every home game this year, fans can participate in a 50/50 in which half the money raised goes to the winner and the other half is donated to the Diamondbacks Foundation to fund their initiatives. Additionally, funds are raised through a yearly gala, a celebrity golf tournament, the sale of authentic items such as balls or jerseys, as well as donations from D-Backs players and other community partners.

Since the initiative began in 2000, APS and gifts from players have provided over $10 million to build or refurbish more than 40 baseball and softball fields. Additionally, the Foundation has been providing youth and caps for over 60,000 players across the state since 2014 through the Give Back Youth Jersey Program in partnership with Phoenix Children’s Hospital, Fry’s Food Stores, and Tide.

For each year since 2002, the Foundation has issued grants to community organizations between $25,000 and $250,000. Renamed the Ken Kendrick Grand Slam Awards in 2016, over $8.5 million has been provided to the 103 grantees.

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After nearly 80 years, the United States Navy will be introducing the USS Arizona name back into the fleet. The new USS Arizona Legacy Foundation will be there to support the sailors of the new vessel and honor the memory of the old USS Arizona, which was the first ship to sink during the December 1941 attack on Pearl Harbor.

Formed in 2021, the USS Arizona Legacy Foundation has a three-fold Celebrate, educate, and support. The foundation will be celebrating the ship by working with the Navy on both the christening and the commissioning of the submarine that will bear the name. 

Even though a new vessel will be carrying the namesake, the foundation is keen on educating people about the USS Arizona battleship and keeping the memory of its crew alive. Finally, the foundation aims to support the sailors of the submarine and “create an enduring bond between them and the citizens of Arizona.”

Tanya Wheeless, the former CEO of the Arizona Bankers Association and a former senior vice president of the Phoenix Suns, recently joined the foundation as president and CEO. Wheeless says she was motivated to take the position because of its mission of supporting the United States’ servicemen and women who defend our country in the face of a growing number of threats, and keeping the important history of the old battleship alive.

According to Wheeless, the foundation was “created to honor the legacy of the USS Arizona battleship but also forge a new legacy and celebrate the crew and submarine that will also carry the name Arizona.”

The old USS Arizona, a Pennsylvania class battleship, was commissioned in 1916 but did not see combat during World War I. The ship participated in various training and support missions in the 1920s and 30s before being moved to Pearl Harbor in the spring of 1940 when the base became the new home for the Pacific Fleet. 

Within just a few minutes of the Japanese attack on December 7, 1941, the battleship was hit by multiple bombs and sunk to the bottom of the harbor. Nearly 1,200 sailors were tragically killed on the ship, the most of any vessel on that day. The ship still lies there to this day, with a memorial to the sailors built at the site.

Virginia class submarines, one of which will carry the Arizona name (SSN-803), are the next generation of attack submarines for the Navy, carrying significant from previous classes. Virginias will replace the older Los Angeles class submarines as they retire. Currently, the submarine is expected to commission in late 2025.

According to the Navy, Virginia attack submarines carry even more Tomahawk cruise missiles along with various other armaments. Attack submarines such as the Virginia primarily assist special operations forces as well as “carry out Intelligence, Surveillance and Reconnaissance (ISR) missions; support battle group operations; and engage in mine warfare.”

Each ship in the Navy fleet has a sponsor, and the new Arizona will be no different, with Nikki Straton taking the . 

Ms. Stratton is the grandaughter of Donald Stratton, a USS Arizona survivor. In 2017, Stratton presented the Bronze Star posthumously to Joseph L. George, whose heroic actions on one of the United States’ darkest days saved the lives of her grandfather and five others. 

In 2020, the secretary of the Navy personally asked Stratton to become the sponsor and help achieve her grandfather’s final wish that the memory of the USS Arizona and its men will never be forgotten. 
You can visit the USS Arizona Legacy Foundation’s website .

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The of Silicon Valley Bank (SVB) and Signature Bank have left segments of the United States’ banking sector on shaky ground, inflicting increased scrutiny on financial institutions and rattling the nerves of the customers they serve.

But Arizona bankers say the sector is on solid footing.

“The banking sector in the United States – and Arizona is no exception – is safe, sound, and resilient. It is well-capitalized and highly liquid, and all Arizonans have ready access to their deposits,” the Arizona Bankers Association said in a statement.

Midsize banks have been found to have been most vulnerable, with First Republic Bank spiraling into turmoil before a group of 11 major banks $30 billion to give the struggling bank a lifeline and calm fears over wider economic troubles.

Following a series of moves by SVB that caused a full-scale bank run and eventually  led to its collapse, federal government regulators stepped in to close the bank. Because SVB’s clientele consisted largely of tech startups and venture capital companies, many of the corporate accounts contained more than the $250,000 typically insured by the FDIC. After the initial fallout, SVB depositors faced the prospect of losing more than $150 billion in uninsured deposits in the second largest bank collapse in U.S. history.

On March 8, however, Treasury Sec. Janet Yellen, the Federal Reserve and President Joe Biden said that they would use a “systemic risk exception” to cover the uninsured deposits of SVB and Signature.

The Arizona banking community, however, says the SVB situation was unique and not indicative of wider problems.

“The situation with Silicon Valley Bank is distinctive to that particular bank. Besides Silicon Valley Bank, which has limited back operations and no deposits housed in Arizona, there are no banks in the state that are similarly situated,” Arizona Bankers Association said. “It should be emphasized that no depositors at the banks that closed their doors last week lost access to any of their funds.”

Back in 2019, SVB announced the bank was opening a new 60,000-square-foot in Tempe to provide back office support services.

In a to the Federal Reserve, Sen. Kyrsten Sinema, I-Ariz., and several colleagues voiced their concern over whether the Fed missed clear warning signs about looming troubles for SVB.

“It is gravely concerning that retail participants, utilizing only publicly available information, were able to identify clear and compelling examples of financial mismanagement and asset over-concentration at SVB, while the Fed, which can draw even deeper from non-public supervisory information, was unable to ascertain a similar conclusion,” the letter said. “The fact that the San Francisco Fed, among other regulatory agencies, found no reason to take appropriate regulatory action or even investigate SVB further in the months, weeks, and days prior to the bank’s collapse must be addressed in a manner that restores public confidence in Fed supervision.”

Despite the tumult at SVB, the Arizona Bankers Association remains confident in the U.S. banking system’s stability. 

“Arizona Bankers Association has a high degree of confidence in the banking sector in Arizona and the United States. Every Arizonan should know that their accounts are safe and their deposits are protected. Our industry will continue to work with the administration, regulators, and Congress to further bolster that trust,” the group said.

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The AH-64 Apache Helicopter produced by Boeing has reached 5 million flight in 2023, proving the helicopter’s versatility and reliability for the U.S. Army after nearly four decades of continuous service. 

The Apache has been built by Boeing in Mesa since its first flight in 1984. Over the last few decades, the U.S. has deployed the A, D, and E-models around the globe as a vital asset to the United States’ combat operations.

Five million flight hours roughly equates to more than 208,000 days or nearly 571 years of nonstop flying. More than one million of those flight hours occurred during combat missions. 

“With more than five million flight hours, the Apache continues to be reliable, versatile and lethal,” said Katie Yursky, the interim vice president of attack helicopter programs and a senior executive at Boeing’s Mesa site. “Congratulations to the U.S. Army and its Apache aviators on reaching this incredible milestone. Every hour counts, and we look forward to supporting our soldiers on their next milestone and beyond.”

Despite turning 40 next year, neither Boeing or the U.S. has any plans to move on from the Apache anytime soon. In fact, the company is currently installing upgrades to the E-model that include updated software and an improved engine. Additionally, Boeing in October 2022 that the company is developing a modernized Apache concept to meet “the Army’s evolving attack and reconnaissance requirements — including increased agility, interoperability, lethality, survivability and reach.” 

The new model will not only improve the Apache’s attack capabilities, it will also employ advanced digital technology as part of the company’s push towards digital innovation.

Since Boeing opened its manufacturing plant in Mesa in 1982, the company has brought jobs and economic growth to Arizona. As of 2021, the plant more than 4,400 workers at its Mesa plant, making Boeing the third-largest manufacturer in the Phoenix valley. Additionally, Boeing relies on nearly 350 Arizona businesses that act as vendors and suppliers.

Boeing’s presence in the state only continues to grow with the company recently completing construction on a 155,000-square-foot expansion to the Mesa plant. The new space will be used to produce materials for Boeing’s next generation of military aircraft. 

“The new advanced composite fabrication center and the factories that will follow it position Boeing to deliver the most digitally advanced, simply and efficiently produced and intelligently supported aircraft to military customers,” Boeing Defense, Space and Security President and CEO Ted Colbert said.

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The Arizona business community and city leaders are urging lawmakers to pass legislation that would spur the development of infrastructure to attract major advanced manufacturing investments. 

The bill, HB 2809, sponsored by state Rep. Michael Carbone, R-Buckeye, updates a law originally adopted in 2012 that directs construction sales tax dollars generated by major projects into surface roads, water, and wastewater infrastructure to support the private business investment. 

The original law capped the amount that could be recaptured by cities across the state at $50 million total. The Legislature in 2022 raised the cap to $100 million, but economic developers say that limit will soon be reached, which could chill the state’s ability to attract more blue-chip manufacturers as local governments would struggle to develop the infrastructure necessary to support such large investments. 

The bill proposed by Carbone would allow the project city to recapture up to 80% of the project’s construction sales tax revenues and redirect them to infrastructure. To qualify, a project in Maricopa and Pima counties would have to be more than $500 million, while projects in all other counties would have to be more than $50 million. 

Business leaders including Danny Seiden, the president and CEO of the Arizona ˿����Ƶ of Commerce & Industry, Greater Phoenix ˿����Ƶ President and CEO Todd Sanders, and Arizona Technology Council President and CEO Steve Zylstra, as well as city leaders like Phoenix Mayor Kate Gallego sent a letter on Wednesday to members of the state House of Representatives urging passage of the bill. 

The coalition says the program “recognizes major manufacturing produces enormous regional and statewide benefits,” but that “the cost of developing or expanding the public infrastructure to support these projects creates significant cost challenges for the hosting municipality,” which passage of the legislation would help alleviate. 

“When we try and get businesses to expand in state, or come to our state, infrastructure and talent are always the top two things that come into play,” Seiden told the House Commerce Committee in a hearing on the bill last month. “This tool is one of our top selling points for them, so allowing us to expand it and keep it going is very helpful.” 

Carbone said he wants to be sure the state has the tools to remain economically competitive and that he wants economic developers to promote the state “without hesitation or risk.” 

“We don’t want to find ourselves in a situation where our economic development incentives create uncertainty or regional winners and losers,” he said. “I believe this program will continue to support large economic development projects statewide based on our current economic pipeline projections.” 

Specific qualifications must be met for a city to be able to participate in the program, including that the infrastructure built must be for “qualifying advanced manufacturers certified by the Arizona Commerce Authority.” 

Arizona Manufacturers Council Executive Director Grace Appelbe said Carbone’s bill is fiscally responsible. 

“The business community and cities aren’t looking for the state to spend anything on this program,” Appelbe said. “We’re talking about sales tax dollars generated from the construction of job-creating manufacturing facilities that are then reinvested back into the community infrastructure that advanced manufacturers require. This bill means more jobs for Arizona without overburdening state and local taxpayers.” 

The House Commerce Committee unanimously passed the bill. It now awaits a vote of the full House.

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A new bill by Speaker of the House Ben Toma, R-Peoria, would streamline the permitting process for new construction, hopefully helping the state meet the huge demand for housing. 

HB 2536 the permit process by allowing town or city administrators in certain cases to review and approve plans without public hearings. Toma has also proposed allowing architects and engineers to certify building plans on their own. The bill would also reward safe and compliant building practices by giving companies with a history of compliance access to an expedited permit review process.

Tom Belshe, the executive director of the Arizona League of Cities and Towns, in a House Government Committee meeting earlier this month that his organization supported the bil. 

“We appreciate working with the Speaker and President Petersen on this language,” he said. “We agree that giving this ability to cities and towns will be helpful in taking some of the lengthy processes that exist right now.” 

Belshe specifically highlighted how doing away with unnecessary public hearings and empowering city administrators to complete those tasks will help local governments expedite the permitting process.

Toma says that the bill does not remove necessary transparency because cities must meet multiple criteria before being eligible to skip public hearings.

According to Toma, the legislation is a step in the right direction for addressing Arizona’s growing housing and rising cost of living. The Arizona Department of Housing recently estimated that the state is facing a shortage of more than 250,000 housing units. The bill would provide much needed support for developers as they attempt to meet the ever-growing demand for housing.

The lack of affordable housing in Arizona has become one of the hottest topics in the state, with both parties agreeing on the issue’s importance but disagreeing on how to solve the issue. 

Between 2011 and 2021, the average price of a home rose by an incredible 260%, threatening economic growth by pricing out locals and turning away families interested in moving to the state.

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Arizona Gov. Katie Hobbs, D, has prioritized increasing affordable housing as the state continues to grow as one of her administration’s goals. 

For Hobbs, it is critical that non-profit organizations and local communities continue to be involved in efforts to make housing affordable. 

Hobbs supports increasing low-interest financing access and legislation that encourages developers to build affordable housing through the use of tax credits. 

Despite the split government with Republicans controlling the Legislature, Hobbs hopes that a bipartisan agreement can be reached on such an important challenge facing the state. According to last year’s by the Arizona Department of Housing, 270,000 units would need to be built to meet current demand.

“This is an area that is ripe to work together and find common ground. There were some interesting bipartisan proposals put forth last year,” Hobbs Channel 15.

During her State of the State address on January 9, Hobbs laid out some of her first to tackle affordable housing. 

First, she announced that the Interagency and Community Council on Homelessness and Housing will be making a comeback. Second, Hobbs to contribute $150 million to the Housing Trust Fund (HTF), a controlled by the Arizona Department of Housing that helps the state efficiently use federal housing funds. Money from HTF can be used for housing development as well as homeless shelters and other housing services. If implemented, this would be a vast increase to the $60 million allocated to HTF by the legislature last year.

During her governorship, Hobbs intends to use all resources available to increase access to affordable housing, saying, “We need to build, build, build, but we also need to focus on affordability. That’s going to require an investment in the federal government, state government, local government and the business community.”

Hobbs’ urgency comes as Arizonans are increasingly becoming priced out of housing options, with prices experiencing big spikes over the past 10 years. According to a , the Phoenix-Mesa-Scottsdale metro area has seen the second largest price increase in the United States between 2011 and 2021, with prices increasing by an eye-popping 260%. In 2011, the average price in the area was $115,500. By the end of 2021, that number had climbed all the way to $415,400. In the same time period, average home prices also more than doubled in the Tucson area as well. 

According to data from online real estate site , average home prices in Phoenix did not crack $300k until mid 2020. By the middle of last year, prices had ballooned all the way to around $460k, before settling back to $400k at the end of the year as interest rates went up and inflation continued to rise. 

Legislative proposals

Lawmakers have their own ideas. An amended version of SB 1117 by state Sen. Steve Kaiser, R-Phoenix, would reform most zoning laws and would require cities to allow denser developments.

The bill passed the Senate Commerce Committee 5-2 and has backing from the Arizona Association of Realtors, the Arizona chapter of NAIOP, the Arizona Multihousing Association and other business groups.

Cities, including the League of Arizona Cities and Towns, are strongly opposed. 

Other proposals so far this legislative session are less marketed oriented. Several Democrats have introduced bills to impose various forms of rent control. The Arizona ˿����Ƶ of Commerce & Industry and Republicans in the Legislature remain staunchly opposed to such efforts. Rent control remains banned in Arizona for private properties.

Following the implementation of rent control measures in San Francisco, rents went up by 5% and the rental housing supply market shrunk 15% as landlords rushed to sell their properties.

A threat to economic growth

During a to the Gilbert Town Council, economist Elliot Pollack explained how the shortage threatens the growth that Arizona has seen over the past few years. 

“Supply has not kept pace with demand and our success as a community in attracting jobs and people has not been matched by a sufficient increase in the housing supply for those new employees and a continued shortage of housing is going to drive up costs and threaten economic development efforts,” he said. 

Gov. Hobbs at a recent event that highlighted innovations in affordable housing agreed that a constrained housing supply could crimp Arizona’s economic growth, saying the business community needs “a workforce to hire as the cost of living here in Arizona threatens to hold back retaining or attracting the talent that they need.”

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A new from the Common Sense Institute (CSI) found that $24.1 billion and hundreds of thousands of jobs have been generated by Arizona’s growing sports and tourism sector.

According to the report, the sports and tourism sector employs 11% of Arizona’s total workforce and accounts for over 6% of the state’s total gross domestic product.

The state now boasts professional teams in each of the U.S.’s top four sports leagues, over 30 state parks, and a staggering 24 national parks, including the Grand Canyon. According to CSI, Arizona’s moderate climate and numerous attractions places the state in a prime position to attract year-round tourism for major sports events such as the Super Bowl and the WM Phoenix Open, along with outdoor activities like golfing and hiking. 

Of the $24.2 billion contributed by sports and tourism, $13.7 billion was generated through “Direct sales by Arizona’s hotels, casinos, performance venues, and other components of the state’s sports & tourism sector in 2022.” One hundred sixty-seven thousand workers are currently employed directly by businesses in the sports and tourism sector with nearly another 200,000 jobs indirectly supported.

According to Katie Ratlief, executive director of the Common Sense Institute, “Arizona’s moderate climate, excellent hospitality industry and major event spaces have made it a magnate tourism destination.” 

“This growing sector is a massive contributor to our economy, and big events like this weekend’s Super Bowl will only continue the momentum. Arizona’s hospitality industry is truly the ‘welcome mat’ for millions of visitors to our state,” she said.

CSI’s report finds that the sector has not reached its peak yet. The think tank estimates that over the next 10 years Arizona will see the sports and tourism sector grow on average 3% per year. With Arizona hosting its fourth Super Bowl since 1996, the state’s ability to consistently attract major events will ensure that the sector can grow in the future.

When Arizona last hosted the Super Bowl in 2015, the Arizona Sports and Tourism authority found that the event contributed more than $719 million dollars alone. CSI and other observers  project that Super Bowl LVII will turn out to be an even bigger event, contributing even more to the growing Arizona economy once the dust settles.

The Super Bowl also offered Arizona the chance to showcase its friendly business environment, as the Arizona Commerce Authority and host committee welcomed CEOs from across the country at a CEO Forum to learn more about why Arizona is a great place to grow a business.

Arizona ˿����Ƶ of Commerce & Industry President and CEO Danny Seiden moderated a on the state’s workforce that featured the presidents of UArizona and Northern Arizona University, Arizona State University Executive Vice President Sally Morton, and Pima Community College Chancellor Lee Lambert, who gave attendees an insider’s view at how their schools are preparing graduates for today’s economy.

“The CEO Forum is the perfect opportunity for business leaders from across the country and even around the world to get an up-close look at why Arizona has one of the nation’s strongest and most dynamic economies,” Seiden said. “It’s just one example of how the sports tourism market is about much more than just what happens on the field.”

Like many other industries, the sports and tourism sector was hit hard by the 2020 pandemic. But since then, the sector has come roaring back even stronger than ever. 

Kim Sabow, the vice chair of the Arizona Sports and Tourism Authority Board and the president and CEO of the Arizona Lodging and Tourism Association said the sector has faced recent pandemic-induced headwinds, but hosting the Super Bowl brings tremendous momentum

“Arizona’s sports and tourism industry has been through a lot of challenges over the past three years,” she said. “Thanks to our operators and our dedicated employees, we’ve come out the other side stronger. This weekend is an opportunity to highlight the value and contributions of our industry to an international audience, and CSI’s report shows that this is an industry that has a massive ripple effect across all of Arizona.”
To learn more about the Common Sense Institute, click .

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Despite a steep drop in investment levels, Phoenix’s industrial real estate market stayed strong in the fourth quarter of 2022 according to a recent report published by Transwestern Real Estate Services. Rents continued to rise sharply and Phoenix’s vacancy rates remained surprisingly low considering economic factors like stubbornly high inflation.

Transwestern, which tracks activity throughout Phoenix,  says 4th quarter industrial inventory topped 350 million square feet. There is also 45 million square feet of space in construction and 120 million square feet of proposed space.

With inflation hitting in Phoenix, rent prices continued to tick higher in the last quarter. Rents increased around 10%, from $10.77 per square foot in the third quarter to $11.70 per square foot in the fourth.

Industrial investment levels were hit hard in the final months of 2022. Transwestern reported that investment levels were cut nearly in half when compared with third quarter investments, declining from $960 million to $593 million, an almost 70% dip in investment year-over-year.

Transwestern Senior Research Analyst Jennifer Barili was not surprised by the downturn. 

“The industrial market had a very impressive streak of eight quarters of record-breaking investment levels,” Barili said. “While there was a marked decrease this quarter, the activity level was still right in line with pre-pandemic averages. That torrid rate simply couldn’t continue, and the hot investment market needed to return to equilibrium.” 

Transwestern does not expect investment levels and lease activity to sharply decline below equilibrium levels in 2023 due to continued high demand.

Industrial real estate vacancy levels in the Phoenix area have remained incredibly steady throughout 2022, despite inflation reaching double-digits. 

In the fourth quarter, vacancy rates reached 4.8%, just 0.2% higher than the previous quarter. 

Throughout 2022, rates stayed below the reported 5% vacancy rate that concluded 2021. This is also nearly 3% lower than vacancy rates that reached 7.5% during the peak of the pandemic in 2020, marking a strong recovery for the industrial real estate market.

While the fourth quarter brought a slight downturn, industrial construction levels remain high. 

In 2019, less than 10 million square feet of space was under construction each quarter. As Phoenix was coming out of the pandemic downturn in 2021, construction nearly doubled, beginning the year with around 20 million square feet under construction in the first quarter and surging to nearly 40 million square feet by the end of the year. 

Construction levels peaked in the third quarter of 2022, reaching a staggering 55 million square feet.

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