The Clark Report
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News, Culture, Self Deprecation
May 2009
In This Issue
Get Your PHX at monOrchid
We Past Market Bottom
Downtown Venue Review
Downtown Rebound and You
Unsolicited Shout-outs
Get Your PHX: Resurgence of monOrchid

monOrchid

The goal of Get Your PHX is to turn out, en masse, to support those who pioneer new restaurants, bars and event spaces. We want to provide them a boost just when they open. Plus, we want to provide a chance for you to meet others, like yourselves, who want to get the most out of Phoenix.

Thanks to Ben Bethel at The Clarendon for hosting April's Get Your PHX. We met new people. We enjoyed the pool. We raffled prizes. Can't beat that.

The May Get Your PHX is all about new beginnings. It's all about starting over and maintaining a great tradition. 0ver 10 years ago, Wayne Rainey and his partners bought an old sailboat storage warehouse downtown, built by Del Webb in the 1950s. It started as just a big, open space to have a large photography studio.

But, it became MonOrchid.

By 2001, it was the hub of the budding First Friday movement and Art Detour. There were new installations and shows there every month. It was the first we saw of actual crowds downtown; not counting the ones that high-tailed it out of here after a game.

That was when the Paisley Violin was where Carley's is now. That was before every air-brushed t-shirt dealer in the valley set up on Roosevelt on First Friday. It was when you could get free wine in the galleries just for showing up.

But a series of unfortunate events turned it all upside down; bad luck, illness, poor economy. Mon Orchid was almost a note in history. The art on the walls was gone. Most of the creative class that rented the office space vacated. There is no need to go in to the details. But, I don't know many people who could have survived like Wayne and Alison Rainey have.

monOrchidAnd recently they opened again; not a shadow of past glory, but a new centerpiece of activity. They began hosting inspiring shows again in March of this year. With the space re-energized, creative businesses have returned and opened their doors once again.

That is why the May Get Your PHX is dedicated to Mon Orchid.

They will open their doors especially for us to see the Culture Shock: Art and Culture Show, on display through May only.

May Get Your PHX
Thursday, May 21st from 5:30 to 7:30
monOrchid
214 E Roosevelt St
Phoenix, Arizona 85004

Now, folks, we are asking for only a $5 contribution to offset the cost of wine and nibbles.

monOrchid is not a bar, but we are all throwing down some serious cash to make certain y'all get an endless supply of libations. It's as close to free as we can get. If there is any money left over, it will go to Roosevelt Row Community Development Corporation, a 501(c)3 non-profit organization.

Please RSVP to me via email or through Facebook so I can get an accurate count. 

If you have suggestions for the next Get Your PHX, please let me know.

I'm Callin' it! We Passed the Bottom of the Market in April

So, the other day I was speaking to a man who was looking to purchase 100 homes in the valley to flip and sell in less than a year.

It got me thinking. Why should only the prospectors have all the benefit of the low market? We certainly don't want the central Phoenix market flooded with investor properties owned by people who don't live here! What effect would that have on what we have built?

So, this is a call to action for all Phoenix advocates.

Armed with the following information, you and I can fight this trend.

Please send the following proof to anybody you think would benefit from seeing it. If they were thinking of buying a house any time in the next year, they need to see this information now.

Folks may think they can't compete against cash investors or that they don't have the financing. It's not true. There are solutions.

Here are the leading indicators, which prove that the market has passed the bottom.

Click on the images to see in greater detail.

1) Average sales price. Remember how I've said you won't know the lowest point until it's already gone? Well, it passed us the second week of April. This is driven mostly by homes under $200,000, 40% of which are foreclosures. But this means you are seeing the beginning of the rebound.

April 30 Average Sales Price

2) Months' Supply. If you divide the total number of houses on the market by the number that sell every month, you will get the months' supply. A year ago, a $300,000 house could expect to stay on the market for over 18 months. That has dropped very quickly to 6 months. (Market equilibrium is usually 7 months.) Homes under $150,000 are now expected to be on the market less than 4 months, and I'm seeing the nicer ones gone in days.

We have not seen this since the boom in 2006!

April 30 Month's Supply

3) "But," you say, "I've heard that there are more foreclosures coming." Yes, there are, but not in the apocalyptic numbers that the media is predicting. This is a really interesting chart. The blue lines show the origin months of all sales in January and February 2009. In other words, of the sales in January 2009, how many came from original purchases in which months in previous years? You can see that every month we are clearing out all of those properties that were purchased at the height of the market. This means that there will be fewer foreclosure homes pushing prices next month.

April 30 Deed of Trust
     Source: www.cromfordreport.com

By the way, I've also found options for you even if you've had a foreclosure in the past three years!

Call me if you want to break these numbers down further and come up with a strategy to take advantage of this shift point in the market.

Downtown Venue Review

The Vinery
214 W. Roosevelt

These guys have had a hard time of it, I'm afraid. They've only been open since mid-April. They don't have a liquor license yet. They've been handing out free sangria to compensate, and I've still heard some complaints.

A group of seven of us went last week; very excited to try it out. I felt like I wanted to like it more than I really did. There were so many things that they did right, but such crucial things that they missed.

We sat out on the sidewalk with beautiful trees overhead and a very soothing atmosphere, despite the traffic on Roosevelt.  The pizza oven was down, so we couldn't try that most important staple food. The prosciutto panini, on the other hand, had a beautifully layered and textured taste.

Owner and chef Leonard Jay came out at the end to apologize for the oven being down. I wished him the best, but I couldn't help sense that his less-than strong start was going to get the better of him. Still, it's refreshing when restaurant owners take responsibility and attend to their customers.

To be fair, it was still considered a soft opening until May 1st. I hope they get the wrinkles out because I saw such great promise.

The Good: Great presentation, beautiful flavors.

The Bad: Still a little disorganized. Don't give up yet.

The Ugly:  "Could I get a little sangria in my water, please?"

The Downtown Rebound and You

I've gotten really tired of the news recently. I've learned not to trust it when it comes to the recession.

The endless stories just affect us psychologically and actually keep the economy from rebounding. So, I think it is time to start talking about moving on. I think the recession and me are just going to have to part ways. We are going to have to divorce. Sure, we'll remain friends and say hello at parties, and such. But I think its time that I start seeing other economic conditions.

vintage downtown

Over the next few issues I want to tell you a little bit about the future of downtown as we come out of the recession. Maybe we can all take a little vision quest together that will lead us to happier thoughts. Those thoughts will infect those around us and maybe loosen up some investment money. That money will start moving the economy, little by little.

To bring you this story, I started by speaking with Don Keuth, the President of the Phoenix Community Alliance.  The Alliance is a group of over 200 businesses that are dedicated to revitalizing downtown. They've been active since 1984 advocating for major projects, such as sports stadiums, hotels and cultural venues.

According to Keuth, there are actually a number of major public projects that have soldiered on, despite the recession: ASU's college of nursing at 3rd and Filmore (expected to open in September); the new Maricopa County court house at Madison and 1st Ave; and the post office renovation at Central and Fillmore.  The post office will continue to serve as a post office, but will re-orient much of its space to student services.

Just so long as I can get to my good old post office box, I'm okay with that.

A county office building and the Valley Metro building renovation are at a standstill. However, says Keuth, those are more about deal structures and business decisions than the economy.

In the private sector, the much-prophesied hotel boom in support of the convention center is on hold. There was a plan to adapt the old Valley Bank building to residential, called the Monroe Project. Many of the condo projects are in trouble.

44 monroe44 Monroe, the tallest residential building in Arizona, has only 10 occupants, which makes it easy to reach a quorum at HOA meetings.

The Summit has only 100 of 165 units sold and Portland Place is about 80% sold. Some, such as Portland 38 might go rental.

However, says Keuth, the Hanjsi Project is moving forward slowly. This is a a plan to restore the old Luhrs building and incorporate it with a new high-rise hotel

ASU specifically is coming near the end of the bond money that was approved for them in 2003 when I was in the legislature.  According to Keuth, it all comes down to how ASU is going to balance budget issues with the fact that they are running out of classroom space.

What was most interesting about my conversation with Keuth was talking about how the next era in downtown represents a total paradigm shift. We are witness to the application of new theories of building urban areas; the death of "euclidean zoning" and the birth of form-based zoning.

Basically, euclidean zoning segregated "like with like": homes in one place, shopping all grouped together. This has resulted in lots of people driving long distances to work and shop. It required cumbersome processes for getting variances for mixed uses of existing buildings. It also kept development from downtown.

So, blame the Euclideans. Damned Euclideans!

Form-based zoning allows for mixed-use development such as street-level shops under condos, etc. Under this zoning philosophy, the city only says "We don't care what you do in the building. We only care about whether you meet the goals of the area and that you relate to the street, pedestrian environment, context of the neighborhood and sustainability."

Keuth talked about how all of this relates to sprawl. Basically, he says, we won't be able to afford to keep sprawling outward when the recession is over and people want houses again. It is much more expensive to build streets and sidewalks out there than in dense areas, and our legislature seems resistant to new freeway funding.

More people want to live in dense areas than ever before and we will need to find a way to accommodate that.

So, here we are. We are living through a philosophical change  about how we plan cities, the likes of which we've not seen since World War II. The decisions planners make today will determine how people live in the desert 100 years from now.

How cool is that?

All of this leads us to a debate that has raged for years downtown: the big, hundred million dollar developments versus the mom and pops. Why are we putting so much money in to hotels? Couldn't we start a heck of a lot of small businesses with that money?

On the other hand, every big city needs structures that attract people downtown: sports stadiums, convention centers.

Or, is it a debate at all? Why can't we do both? Is that even possible? And who gets to decide?

Next month, I will cover this debate and tell you about some of the major players downtown.

I'll have more interviews, more perspectives and more valuable information.

A Few Unsolicited Shout-outs

Radiate Phoenix is a fantastic non-traditional networking group that meets downtown once a month. They've been at it for almost a year and a half.

Like Get Your PHX, this is a monthly event in support of downtown. However, where Get Your PHX seeks to get an infusion of cash and attention for newly opened venues, Radiate Phoenix is geared toward hosting conversations about specific downtown issues. (They are a little more crebral than I am.)

radiate phoenix

Radiate Phoenix is organized by Claudia Bullmore, Gene Urban and Catrina Knoebl. I'm a fan.

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Burgis Envirolutions did a great presentation on Recycling for the Phoenix Green Chamber of Commerce last week.

In short, we need to get more aggressive in or recycling. We especially need support for small businesses to recycle. See their website for the full presentation or click here for a smaller version.

Consider this:
  • In 1960, Americans generated 88 million tons of trash annually, but recycled almost none of it.
  • In 2007, we generated 254 million tons and recycled 85 million tons.
  • On average, we recycled and composted 1.5 pounds of our individual waste, but generated a total of 4.6 pounds per person per day.
  • We are running out of places to put it. In 1988, we had almost 8,000 landfills. In 2007, we had about 1,700 land fills.
Burgis
          Source: www.burgisenviro.com

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My friend Jessica Catlin is hosting a group on Facebook for her Valley Leadership project to get a discussion going about the past, present and future development of downtown Phoenix.

Please have a look here and join in the discussion.

Got any good downtown tips? Send 'em my way!

And, as always, I respect your right not to be bothered with annoying spam email. If you would like to be removed from my email list, just let me know. Thanks!


Sincerely,
 
Ken Clark
K. E. Clark Independent Consulting
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