| What do you enjoy most about the commercial real estate business? What do you find most compelling and fulfilling in the work that you do? (Participants responded with multiple answers, condensed below.) COPPOLA: I love being involved in the growth of Arizona. Dealing with community leaders and peers. As a third-generation Arizonan, I am deeply committed to our state. DAVIS: First and foremost, I enjoy the relationship building within the industry. I also enjoy the strategic planning aspect that goes along both the short- and long-term goal setting. Another aspect is being part of team that creates sustainable projects. FITZ-GERALD: The variety and change that occur every day. The opportunity to lead the community in a new direction. Phoenix is a very competitive market, and the people are the best in the industry anywhere. HELTON: Being a part of shaping our community. LIU: The players in the real estate game and the different strategies they use to develop their properties. Their developments tend to reflect their personalities. MITCHELL: I enjoy helping my clients and various parties come together to get deals closed where everyone wins. Real estate is particularly fun since we get to see the results of the deal in concrete. Real estate transactions also help make us feel like we are more connected and involved in the community, since real estate affects everyone. RIGGS: I enjoy the vast opportunities in the market, and that every day we get to do something different and create projects that are interesting. SHENFELD: Building relationships with people from different fields: developers, architects, brokers, city employees. VOS: People -- the real estate community at large. Opportunity, fast-paced growth, diversity of projects. Helping folks who are relatively new to development realize their goals. Strategies: Where are the next opportunities going to happen as new industries consider Phoenix? WELLS: The role I play at my company requires many different skill sets. Each day is a new opportunity. Watching the Valley grow from a sleepy town to a vibrant city with quality projects. A colleague from another state is talking to you about your work. He/she asks you how the commercial real estate business is doing overall in Arizona. How do you respond? COPPOLA: The real estate and brokerage industries are doing very well. Looking at the different segments (residential, office, industrial, retail, multifamily) creates a somewhat different perspective. Each segment is in varying phases of a cycle. In general, this is a great time to be involved in any aspect of real estate. The outlook for growth is unbelievable. DAVIS: The market is still rather strong. Our housing market, like other parts of the country, has slowed, but it has not affected commercial growth. I see a softening of the market in 2007, but then robust growth for the next several years. We are poised for tremendous opportunities in many different project sectors. LIU: Commercial real estate is faring better than residential real estate. But there is compression occurring in the cap rates, and some tenants are going from Class A to Class B. There appears to more negotiation between landlords and tenants. A lot of the investors are large, out-of-state investors. The same goes for lenders, so it's gradually losing the "small-town" feel. What drives these investors and lenders are yield and coverage rather than relationships. Most commercial property types are in equilibrium except for office, where there are still some opportunities. FITZ-GERALD: The commercial real estate industry today is healthy and growing. The key indicators of overbuilding are in line for new construction. Many tenants are in a state of sticker shock as rents are at all-time highs. This is temporary, and alignment with demand and prices will meet by the fourth quarter or the first quarter of '08. HELTON: The real estate industry in Arizona is, in my opinion, extremely strong. As people continue to migrate to Arizona, we will see continued growth in retail, office, hospitality, health care and other areas. The one sector I believe we have a weakness in is industrial. MITCHELL: The real estate industry is dynamic, competitive and growing. There are opportunities in every segment in the business, as well as the opportunity to have a real impact in Arizona. Just as an example, our real estate practice is growing so fast that we are struggling to find qualified young lawyers to grow our practice and support our clients. RIGGS: The commercial real estate industry overall is strong in all areas. Retail has excellent absorption in all areas, including large power centers in all corners of the Valley. Industrial is leasing and selling, office vacancies are low, and new inventory is not overcommitted so it is stable. And although commercial land is still not affordable for most projects, there are numerous infill and redevelopment deals that exist. It is still a great time to be in commercial real estate in Arizona. Providing interest rates remain stable this year, it will continue to be strong and consistent. SHENFELD: The industry as a whole is in excellent shape. The number of people moving to the Valley every year will keep everyone in our industry busy for many years to come. While housing is currently in a cooling-off period, the retail, office and industrial markets remain busy trying to catch up. VOS: Growth continues, and there remains abundant opportunity. Real estate and construction play a large role in Arizona's overall economy. However, to sustain this exciting growth, more attractive incentive packages need to be structured to attract new businesses and industries to Phoenix and Arizona. WELLS: Things are good. We are slowing down a little, but that's not a bad thing. We need to catch our breath and adjust to what has happened and is happening through 2008. Lots of big private and public projects have taken a lot out of the Valley in the way of resources. We've grown from where the average-size construction project was $5 million to $10 million, to where it's $20 million to $30 million. The housing market slowdown is affecting some projects on the edge of the growth ring, but we still are growing at a good rate. 
What is the single most significant issue facing Arizona's commercial real estate industry, and why is it significant? What is the consequence of the issue, and does it present a leadership opportunity? COPPOLA: Getting corporate headquarters (big or small) to relocate to Phoenix is the most important issue. I believe if we can get the political, corporate and educational leaders to focus on this, we can solve almost all of the other issues we are facing. Bringing in good jobs creates higher pay, more spending, quality growth and long-term sustainability in our economy. DAVIS: How do we absorb the number of people into our state for jobs, housings, etc.? It is important because it relates to our future economic growth and quality of life. The consequence of the issue is if we don't absorb properly, we won't have the strong economic base and quality of life we should. There is a leadership issue. We need to begin discussions now that will affect our future. It all begins with dialogue. The green building movement of 10 years ago is a good example of how conversation can grow into action. FITZ-GERALD: The biggest issue is the cost of fuel. The reason it is a huge issue is that we do not have a mass transit system. When fuel hits $4 per gallon, the cost to fill a small car is $60 per tank, and the average commuter fills up twice a week. This hits available dollars (disposable income) and stops consumer spending that drives the economy. North Scottsdale has one bus route where there are almost 100,000 jobs. The leadership opportunity is to lobby the cities to increase mass transit, to work with cities to expand the coverage. HELTON: The biggest issue facing Arizona is protecting our lifestyle. Another issue is developing our "brand" nationally. The future of our strength will be attracting employers and employees. If we don't clearly define the reasons for people and business to relocate to Arizona, why will they? 
LIU: Growth management and sustainability of that growth.Given the move toward a service economy, these are jobs that can move anywhere -- and unless they feel comfortable in a community, these jobs can flee at a moment's notice. There currently is no product differentiation, and the helter-skelter growth seems to be analogous to a patchwork quilt. If left unchecked, it will have the Phoenix area resemble Houston or Los Angeles, which people are starting to flee from. Legislators should step to the plate in helping to resolve these land management issues. Having more things on the ballot for the general population to vote on appears wto indicate that legislators have abdicated their responsibility. MITCHELL: Quality of life -- this is what brought everyone to Arizona. And if it is negatively impacted by growth, then that is what will drive people away. The consequence of that migration away from Arizona will be slow or no growth, an eroding tax base and a corresponding breakdown in infrastructure, rising vacancy rates and lack of jobs. There clearly is an opportunity for leadership -- the commercial real estate industry must be responsible and accountable in proposing and developing projects, even to the extent that may impact short-term results. RIGGS: The No. 1 issue facing our industry is national interest rates, as they affect my ability to finance a deal, my carry costs, my buyers' ability to finance and my contractors' costs. Its ripple effects are in all aspects of the deal and will instantly slow or stop development. Equally important, it will dictate what I can build, even if that is not what the market wants or demands. If not addressed, it will slow or stop most development. And, more important, it will bankrupt many projects and developers. SHENFELD: Transportation. We don't want to be Los Angeles. It is becoming difficult to move the work force from the outer limits of the Valley into the employment areas. Currently, freeways are full for longer periods each day. As we build more residential infill projects, what will the surface streets look like in three to five years? VOS: Phoenix is on the threshold of assuming a national and international presence. However, we need to have a long-term strategic plan with consensus in place. Absent a unified plan for growth, we will not sustain our growth and Phoenix will fall off the national radar screen. We will be known as a great place to vacation, but not live. Without leadership from all industry sectors unifying and taking a role in expressing one global vision, we may not succeed. WELLS: The lack of a regional plan and oversight organization that addresses issues such as water, air quality, traffic, etc. This effects us both internally and externally. For example, if we do not address the air-quality issue quickly, then we will lose the ability to plan our roads. The federal government will take on that role. If we don't address the water and heat issue, then we will lose some of our quality of life, we will become a less attractive place to live and our population growth will slow. This impacts the numbers of available employees in the workplace and consumers who spend money.
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