How's Main Street doing?
As a national recession deepens and the federal government bails out Wall Street, Americans are increasingly concerned about the economic health of Main Street. That phrase evokes images of family-owned businesses in small towns. Yet, every city has a Main Street — a major boulevard of commerce in its downtown business district. To find out how these communities are doing, USA TODAY visited five Main Streets in different-size cities around the country.
The first in our series: Central Avenue in Phoenix.
If you dine in the Compass Room, a rotating restaurant atop a skyscraper in downtown Phoenix, you'll get a 360-degree look at huge development projects going up.
Luxury hotels, university dorms, nightclubs, condo lofts and a commuter train are all under construction or just completed here. The new projects huddle on both flanks of Central Avenue, the main street of America's fifth-largest city.
The place seems to be booming.
But what you can't see is the stress on the faces of big investors and small shop owners who have poured money into a burgeoning metropolis at what just might be the worst possible time.
First, the housing market crashed, wiping out Arizona's main economic engine. Foreclosures set a record in September, although they've since fallen. But as the credit market dried up, developers were left without financing, and construction on some of the city's major projects is at a standstill. To make matters worse, tourism, the lifeblood of many downtown businesses, went into the tank. A million fewer passengers have passed through the city's airport so far this year.
Now, Arizona State University, which just expanded its downtown campus, is firing instructors to cut its spending. "We had a big bubble here, and it burst," said Anthony Sanders, professor of economics and finance at ASU. "We've taken Kevin Costner's Field of Dreams and now it's Field of Screams. If you build it, nobody comes."
In a speech just months ago, Mayor Phil Gordon described how downtown Phoenix was on the cusp of a new era: Central Avenue would no longer be empty after dark, but the main artery in a bustling metropolis.
Today, the mayor is trying to cut his office spending by 30% amid a budget crunch, and recession hovers over Central Avenue like a vulture.
Even boosters struggle to maintain enthusiasm. "Some cities might have a downtown in decline. Ours is on the move," said Lyle Plocher, an urban property specialist. "But no doubt about it, we've been hard hit. Our biggest problem in terms of 'Main Street' is the real estate slowdown." Last year, home building, sales and related industries accounted for $1 of every $3 generated in the metro area.
"The thing is, people aren't spending," added Ioanna Morfessis, an economic development consultant in Phoenix. "Consumers aren't spending. Businesses aren't spending. Unemployment is going to increase."
Slowdown hits hard
Developer Dale Jensen said his vision of a $500 million entertainment district just off Central Avenue is in limbo because there's no financing.
"It's not the end of the world," Jensen added. "It's just: Can you survive? And that's what everybody's doing, trying to tread water."