Outlook for Tempe Mill Ave District

The Bad News
Many retail stores along Tempe Mill Avenue have failed and closed and some people say that the area is the most "depressed" that it has been in the last thirty five years.

How did this happen? Well clearly part of the reason is that retail sales across the country are down. But this does not explain the depth of the problem.

A big part of the problem is that the transition from a largely college student population to a demographic including high rise condo dwellers has not been easy. Retail rental rates along Mill Avenue skyrocketed in anticipation of a coming population "boom" of these more affluent condo owners.

The problem was that the boom was postponed as high rise condo sales plummeted and construction of thousands of units came to a halt or were cancelled altogether. Of the condos that were completed many many of them were purchased by investors. These investors found themselves competing with one another for a limited number of investors and rents went down.

So, we saw the rents at local shops go up, fewer than expected people moving to the area, and many of the people who did move to the area being of a lower economic demographic than what had been expected.

The Good News
Tempe is hot. The street scene is vibrant and romantic like that found in other dense cities around the world (albeit at a much smaller scale) like Manhattan, London or Amsterdam. It has a young energetic population that lives nearby and spends time and money on the street. It is bordered by a finite geographic feature (ie The Lake) which encourages denser vertical growth vs. sprawl. It's a relatively small and compact area that further adds to the energy. AND the coming new light rail cuts through the center of it.

Tempe will turn around.

The problems with Centerpoint High Rise Condominiums will work themselves out. With this, five hundred or more people will take up residence just off Mill Avenue. Retail rents won't come down but landlords will offer smaller store fronts which will be more affordable for store owners. Smaller shops will mean more shops. More shops will mean a wider variety of products. A wider variety of products will appeal to more people and business WILL boom. As the area gains in popularity (and the real estate market recovers) condo rental rates will go up and more affluent renters will join the area, thereby feeding the economic machine.

With this renewed success of Mill Avenue more condos will be built and true synergy will occur.