Home » Issue Three »Opinion »Volume Three » Currently Reading:

Innovation + City = Prosperity

April 18, 2012 Issue Three, Opinion, Volume Three No Comments

By Rider Foley

For thousands of years thriving cities have fostered inventors and creators from which wealth is generated (1). Yet, in some cases, once prosperous cities have receded into the annals of history by turning inwards, threatened by change (2). There are lessons here to be learned for Phoenix.

Metropolitan Phoenix emerged from innovations in large dam construction that both generated electricity and provided a consistent supply of water to the desert landscape (3). Initially, the young city’s broad boulevards gave wide berth for horse drawn carriages to turnabout. This feature, coupled with the one-mile by one-mile grid of agricultural plots gave rise to a quilt-like pattern of uniform construction practices making inexpensive homes available to many newcomers (4). Combined, these innovations generated prosperity for land owning farmers, land developers and production-oriented home builders (5).

In the last thirty years, the construction industry drove cyclical booms and busts with higher highs and lower lows than almost every other city in America (6). The urban fringe was pushed outward, forcing citizens to cover more miles in their daily journeys to and from the suburbs. Phoenix’s economy followed the construction industry’s lead causing the enrichment of some and cyclical elation and suffering for all others (7). In 2006, 244,000 people worked within the construction sector, that dropped to 115,000 in the last quarter of 2011, across Arizona (8). In Maricopa County this translated into the lowest unemployment rate of 3.6% in the summer of 2006 and the highest unemployment rate of 10.3% in 2009 (9).

There are a number of ways to respond to a recurring problem. One is to ignore the lows and focus efforts on climbing back up to the peak. If you were here in the early 1990’s, you might remember a similar story of collapse in the construction sector written in the city’s history. By allowing the construction industry to boom and expand further afield to the exurbs of Maricopa, Buckeye and Surprise the crash in 2006 was steeper and more painful than the first time around.

So, will Phoenicians get back on the construction industry’s bucking-bronco ride? Sure, some may jump back on for a quick thrill, risking another painfully abrupt crash. For the rest of us I want to discuss an alternative, an alternative to the complete reliance on residential construction as the single most powerful factor in the economic sustainability of Phoenix.

To foster sustainable economy we need to assess the resources available upon which we can build. To take a lesson from history, we must not turn inwards and isolate our community from diverse and innovative ideas, inventions and creations. A wealth of smart, talented people in Phoenix need to be educated and supported in their entrepreneurial efforts. How do we do this? There are 39.5 million square feet of empty commercial space—16.8% of the total commercial/industry space—in metro Phoenix (10). Our cities must partner with private landowners to incubate small entrepreneurs. An example of this proposal can be found in the incubator space for small businesses in Chandler created from the skeletal remains of an old Motorola facility. Yes, it cost $5.7 million in renovations, but it drew talented and creative people to that city (11). Chandler is not alone, Scottsdale partnered with ASU at SkySong, offering mentoring, coaching and space for talented entrepreneurs to grow (12). Chandler and Scottsdale are not competing along the 101 corridor; metropolitan Phoenix is competing with San Diego, Boston, London, Shanghai, Mumbai, the world.

In Phoenix’s financial center, our bankers, lenders, venture capitalists and angel investors need to avert their longing gaze from the siren’s song of real estate investment. They must open themselves to the opportunities inherent in supporting the creatives, the innovators, the entrepreneurs that are fighting to have their ideas heard. A small investment would further an entrepreneur’s efforts, providing them the space to expand, and hire additional talent to produce, refine and ultimately sell their creations.

These resources (space, government commitment and funding) are dispersed throughout metro Phoenix and need to be marshaled for economic growth. I propose that we focus on developing the existing community assets to encourage the birth and growth of small businesses and in turn, redesign our future economic model. We can try to attract corporate divisions to Phoenix. Those types of efforts should not stop. But our emphasis should be on demonstrable support for local entrepreneurs. The future challenges for the Greater Phoenix Economic Council (and their municipal counterparts in economic development) might be to keep our local companies here, rather than working so hard to bring in another distribution center. Retaining local companies, already embedded in the social, cultural and talented pool of local employees, might just be an easier task than always seeking to lure in large corporations.

One society here already faded into the Valley’s desert sands: the Hohokam (13). Communities often turn insular, closed to new ideas or unable to adapt to stress, when faced with internal or external pressures, and fade into history (14). Phoenix could vanish once again.

The world has changed. Your neighboring cities are not the competition; they are a source of future prosperity. Investing in our regional community will enable the most creative citizens to overcome today’s challenges, while taking the lessons learned from the past, and building our capacity to invent the future.

Contributor Biography

Rider W. Foley, a Graduate Student at the School of Sustainability and Research Assistant at the Center for Nanotechnology in Society at Arizona State University

References:

1. Kotkin, J. 2005. The city: a global history. Random House Inc. New York, New York.

2. Kennedy, P. 1987. The rise and fall of the great powers. Random House Inc. New York, New York.

3. Dutton, A.A. 2002. Arizona now and then. Westcliffe Publishers. Boulder, CO.

4. Gober, P. and Trapido-Lurie, B. 2006. Metropolitan Phoenix: place making and community in the desert. University of Pennsylvania Press. Philadelphia, PA.

5. Gammage Jr., G. 1999. Phoenix in perspective: reflections on developing the desert. Herberger Center for Design Excellence. Tempe, AZ.

6. The Economist. 2005. The south-western economy: dreams in the desert. Published Nov. 24.

7. Henig, C. 2010. Real-estate boom-bust: lessons learned. Phoenix Business Journal. Published March 26.

8. Bureau of Labor Statistics. 2011. Databases, tables, and calculators by subject. Retrieved from: http://data.bls.gov

9. Arizona Department of Administration. 2011. Arizona’s workforce employment rate – employment & population statistics. Retrieved from: http://www.workforce.az.gov/pubs/labor/PrNov11.pdf

10. Colliers International. 2011. Q3 2011 Industrial: Phoenix research and forecast report. Retrieved from: http://dsg.colliers.com/document.aspx?report=1853.pdf

11. Scott, L. 2011. Chandler business incubator is nearly full at 95%. Arizona Republic. Published May 7.

12. Casacchia, C. 2008. SkySong Arizona State University Scottsdale Innovation Center celebrates first building opening. Phoenix Business Journal. March 27.

13. Redman, C. 1999. Human impact on ancient environments. University of Arizona Press. Tucson, AZ.

14. Tainter, J.A. 1988. The collapse of complex societies. Cambridge University Press. NY, NY

Comment on this Article: