[caption id="attachment_2452" align="alignright" width="300"] (left to right) Owners of Desert View Aerial Photography: Sherry Eklund and Brett Eklund[/caption] What's it
A new stadium has recently been completed in Tempe. It’s for the professional soccer team Phoenix Rising FC, a team that is only a few years old itself. Phoenix Rising FC formed in 2011 under a different name, different ownership, and a much smaller vision. Since then, the organization has gone through a number of ownership and managerial changes, but the current group seems committed to bring the team up from the United Soccer League (USL) into Major League Soccer (MLS), the top tier of professional soccer in North America. They have signed some big name players and made a commitment to the community that professional soccer in Phoenix is here to stay.
Soccer Fans Are Excited – And There are Lots of Them!
This is an exciting proposition for soccer fans and real estate investors in the Phoenix area. For soccer fans, it means regular top tier soccer on the weekends and a local team to really get behind. Until now locals have had to follow teams in Europe or the MLS without as much excitement or devotion as they might like because they can’t watch the games in person. Much like all the other professional sports in the area, the real enjoyment of soccer comes from watching a live match. Until 2017 the team played games on makeshift pitches in spring training baseball fields. Fans had to sit on one side of the pitch and at quite a distance. The new soccer facility has improved the watching experience immensely. Given the rather simple title of Phoenix Rising FC Soccer Complex, the stadium itself is beautifully compact and designed specifically for watching soccer. Fans have been showing their appreciation, with the recent home opener drawing a record 6,000+ in the stands cheering on their new local heroes.
Professional Teams Do a Lot in the Community
Soccer teams do a lot of community work in their home city throughout the year. The big name stars will probably collaborate with the local business community on advertisement campaigns and the like. That’s bound to bring in some unexpected revenue for local business. The team is also expected to get involved in community initiatives for kids. Visits to schools, community centers and hospitals will happen throughout the year. It’s a nice reminder to the young community that the players care about their well-being and are grateful for their support.
Professional soccer teams also open up their facilities to camps in the off-season. Young soccer players in the area will have the opportunity to do intensive soccer camps with specialist coaches at the Phoenix Rising stadium over the winter months. For those who might not be aware, soccer is tremendously popular amongst the youth in the American southwest. There are a number of high level youth leagues that propel kids to a potential career in the sport. This new stadium fills a huge hole for young boys and girls looking to improve their playing.
Real Estate Investors Should Be Happy Too
It’s not only soccer fans that should be excited, however. Phoenix Rising FC and its facilities are definitely a boon for local construction companies and the real estate market in Tempe. The following will take a closer look at the expected impact the Phoenix Rising FC Soccer Complex will have on each industry.
Expect Some Developments Around the Facility
The Phoenix Rising FC Soccer Complex follows a familiar pattern of development in North American stadium construction. The standard model for sports facilities in all major league sports is quite simple: find a large plot of land within an hour’s commute from the center of town and build a sport complex on it. The grand vision of this kind of development is to cultivate a shopping and living district in close proximity to the stadium, and it’s proven to work time and time again. This is the model that Phoenix Rising FC are following with their suburban soccer complex, as the space around the stadium is quite open and zoned for mixed commercial use.
Here’s how the model works: the sport complex becomes a hub for watching live sports on the weekend as people from the surrounding area drive in for the spectacle. Gradually the economic strength improves enough to see some local stores or food courts popping up. The best case scenario is for a residential development to appear in close proximity to the stadium. A new residential community will require a new grocery store, pharmacy, a doctor’s office, and more – and suddenly you have a mall. It can also help with the revitalization of existing communities which can be helpful since real estate continues to recover from the bubble burst in 2008.
There are countless examples to give of this model succeeding across the nation. Basically name a sports team and they probably have a suburban stadium surrounded by communities and shopping opportunities. Take the Arizona Cardinals stadium, for example. It’s located in the Phoenix suburb of Glendale and is surrounded by shops, businesses and residence communities that have sprung up around it. This model exists around almost all professional sports stadiums in the country.
Not All Stadiums Operate on this Model
There are a few outliers of course, mainly in the MLB. Chase Field is an example of an outlier, along with Wrigley Field, Yankee Stadium, Fenway Park, and a few others. The vast majority of stadiums, however, operate on the standard suburban model in which construction projects of a commercial and residential type pop up in and around the economic hub of the area: the stadium itself.
The Case of Phoenix Rising FC
In the case of Phoenix Rising FC’s Soccer Complex, many exciting construction opportunities are available. In the first place there is already a fair amount of residential development in the general area. That means there is a strong economic base to build on as the area already represents a safe bet from a financial point of view. Perhaps there is already a need for some commercial developments without the presence of the soccer facility. A mixed use commercial mall might already be much needed, for example. In the second place there is a lot of undeveloped land around the stadium. The team itself is not likely to develop it, as they already have ample space to expand. Their presence alone will stimulate interest in the area, as proximity to stadiums has proven to increase demand for, and value of, real estate in the vicinity. Residential developments will likely take the form of housing communities, though they may also include some condominium structures.
So, while the current complex in Tempe might appear underwhelming at the moment, it’s only a few years into the developmental vision of the team and the area. Construction companies should start planning residential communities and commercial complexes in the surrounding area because the economic impact of a professional team is bound to produce the demand.
Real Estate Will Rise Around the Stadium
Many studies have been done to try and prove the economic impact that sports stadiums have on the region. It has been difficult to pin down the commercial value of stadiums. When it comes to real estate, however, the findings are generally conclusive: in a majority of cases, stadiums increase the value of property within the close vicinity. For a number of reasons, some of them listed above, it looks like the Phoenix stadium will have a similar impact.
A recent study backs up this assertion. Trulia.com, a leading real estate listings company, recently conducted a study on the impact NFL stadiums have on real estate value in the area. The study took into account every stadium in the National Football League. It compared real estate value in a 2-mile vicinity to the stadium with the average real estate value in the surrounding metropolitan area. The findings concluded that homes built in and around stadiums are, on the whole, more expensive than elsewhere. Nearly two-thirds of the stadiums reported higher real estate value. This is positive news for real estate agents in the Phoenix area given how much interest there appears to be about the new soccer team.
The study revealed one key feature that must be present for a stadium to increase real estate value. The first feature is an existing neighbourhood in the area. There needs to be an economic base to build on, otherwise the stadium risks becoming isolated. A stadium should not be built so far out of the city that it’s a nuisance to get too. It should instead be constructed in a suburban area that has existing residential and commercial activity. This is backed up by studies in the UK, where soccer is much more popular, that show the pre-existing neighbourhood plays a big role. It’s not just the stadium alone that influences prices, but on the whole they make a positive impact.
It’s All About Location
However, the study also found that a lot of new stadiums have not raised the real estate value of adjacent property. Why is that?
Like with many real estate issues, it all comes down to location. Property values were shown to decline slightly in cities where the stadium was built in relative isolation. Quite simply, if there is no market to build on, the stadium risks being disconnected from other pockets of economic activity.
This is not an issue with the Phoenix Stadium. It has been built on land that is undeveloped, yes, but not isolated from other pockets of economic activity. The big question is how many local businesses will benefit from the increased economic activity in the area.
How Good is the Team?
A lot of this speculation rests on one important factor: how well the team actually does. If they live up to the hype and gain promotion into the MLS, these speculations will become reality in only a couple years. The owner of the club has stated that if the team gains promotion they will build a new 25,000 seater on the site of their current stadium. With the number of financial backers and partial owners involved in the team, it certainly will not be a lack of money that holds them back. The vision of the MLS might become a reality by 2018 as the team is currently enjoying a six game winning streak.
The economic benefit of being a top flight team is certainly quite huge. The potential for revenue alone is quite something, as the MLS comes with television deals, increased advertising potential, and more. Having a team in the MLS would be great for local businesses too. Always on the lookout for effective marketing opportunities, getting a sign at the stadium would be a great way to reach thousands of local consumers. In general, being in the MLS will mean more people at the games, more interest around the team in the community, and higher real estate values around the stadium.
If, on the other hand, the team remains in the USL, a lot of these projections will take some time to materialise. While the team might not make the MLS by 2018, it is realistic that they will gain promotion within 5 years. During this interim period perhaps the region will see very little growth. Real estate markets usually fluctuate in small doses year over year, with long-term trends the more important indicator than a one-year surge.
Exciting Times for Tempe
All things considered, Phoenix Rising FC will have quite a substantial long-term impact on construction projects and real estate valuations. The amount of impact is relative to the team’s success and is not expected to occur within 12-18 months. However, over the next five years, residents of the area can expect to see a number of developments in and around the Salt River Pima-Maricopa Indian Community. The team is bound to be popular in the region because soccer fans are not usually cross-over fans of football, baseball, basketball, or hockey. They represent a distinct market with a lot of enthusiasm for a local professional team. From a real estate perspective, there is no reason to doubt that properties in the vicinity of the stadium will be slightly higher than the average.