Surprise travel budget doubles over 2007

So far this year, the Surprise Economic Development Department has more than doubled its 2007 travel expenses as it tries to lure new business and industry to the city.

The expenses rose to slightly more than $10,000, up from about $4,000 last year.

Department director John Hagen said the expenditures have allowed city staff to attend industry trade shows in an effort to recruit high-paying employers.

For 2008, department staff's priciest trips have been several trips to California and Nevada.

So far, no solid employment deals have grown out of the trips. However, Hagen said Surprise is relatively new to the trade-show circuit, particularly when it comes to trying to woo coveted industries like solar and biotech.

"Those shows, you kind of have to go back more than once to make an impression," Hagen said. "Once you start building relationships, people remember you and things happen."

The timing of Surprise's commercial real-estate market growth is also partly to blame, he said.

Around 2005, when many companies were expanding, Surprise had very few finished office and industrial buildings ready for move-in. Finished office projects opened 2007 and 2008, just as the market retracted.

That activity has given Surprise and the Sun Cities office- and industrial-space vacancy rates of 37 and 42 percent, respectively. The rest of the Valley is at 24 and 11 percent, respectively, said Iain Vasey, a vice president and office real-estate specialist with Grubb & Ellis brokerage.

Vasey said those high vacancy rates should inspire Northwest Valley leaders to explore new economic-development strategies, rather than focusing on travel.

"(Cities) almost have to come up with an incentive package to lower (overpriced office) lease rates . . . companies in today's market are very cost- and price-sensitive," Vasey said.

He added that cities could benefit from looking to fill office vacancies with local companies.

Scarlett Spring, chief operating officer and executive vice president of the Greater Phoenix Economic Council, said she agrees with Vasey in part, noting that recruitment should be done locally. But she added that cities' travel budgets should not be choked.

"Think of the people who have the ability to expand during the economic crisis right now," Spring said. "Credit is one of the biggest issues. We need to look at areas where capital is being infused. Clean energy is one of those areas."

Phoenix has made economic-development recruitment trips to Dubai, Germany and Spain, Spring said. While Surprise has not grown enough that it would benefit from foreign trips, going to conferences in neighboring states such as Nevada and California is smart and should pay off in the future, she said.

Crescent Crown Distributing warehouse worker Sammy Cordoza moves product at the central Phoenix plant.