As we look to the new year ahead with the usual mixture of eagerness and trepidation, we recognize how interconnected we are. Business does not exist in silos, so we value insights from fields that touch our own, even if only peripherally.
In Business Magazine reached out to leaders of businesses in our community for their thought leadership in areas at the very foundation of our economy.
Technology & Innovation
Trending in 2025: A Look Ahead at Arizona’s Technology Industry
from Steven G. Zylstra of Arizona Technology Council and SciTech Institute
As we approach 2025, the global economy stands at a critical juncture. Factors ranging from geopolitical tensions to domestic policy changes shape an unpredictable landscape. Looking to next year, let me share a few of my predictions and insights into this uncertain future, focusing on the technology sector’s growth trends and the broader economic implications.
Weathering Economic Challenges
Economic headwinds dominate the horizon, with challenges such as geopolitical tensions, interest rate pressures and shifting trade policies. The continuation of three significant conflicts overseas has particularly buoyed the aerospace and defense sectors, driving demand for advanced military technologies. Yet, the high cost of borrowing complicates matters for major corporations, including those within technology, as they seek to fund innovation amidst financial constraints.
The recent U.S. presidential election adds another layer of complexity. Policies introduced by the incoming administration, particularly those surrounding corporate taxation and trade tariffs, will likely ripple through the technology sector. On the one hand, proposed extensions to corporate tax cuts and potential improvements to the treatment of R&D expenses could provide a much-needed boost. That’s especially true for semiconductor and electronics manufacturing, with both industries slated for continued growth in Arizona. On the other hand, proposed heightened tariffs — 25% on goods from Canada and Mexico and 10% on Chinese imports — could pose challenges.
Sector-Specific Growth and Turnarounds
Despite these challenges, the technology sector remains poised for recovery and transformation. After being heavily impacted by recent layoffs and facility closures, the semiconductor industry is expected to rebound by mid-2025. Companies like Microchip and Intel, currently scaling back operations, may find themselves reenergized by renewed demand and evolving market conditions. Meanwhile, Taiwan Semiconductor Manufacturing Company continues to push forward with three new facilities, one of which will come online in 2025.
Key areas of growth include aerospace and defense, bolstered by continued global conflicts and advancements in technology. Companies such as Raytheon and Boeing are capitalizing on demand for smart munitions and advanced military hardware. Furthermore, the United States’ potential shift toward a more hawkish defense stance could amplify these opportunities.
In the renewable energy and electric vehicle sectors, innovation remains a driving force. However, reliance on international supply chains for critical components like batteries and solar panels underscores the sector’s vulnerability to trade policies. For instance, tariffs on steel and raw materials used for solar infrastructure and materials for EV batteries could create a challenge by increasing costs, potentially slowing the adoption of clean energy technologies.
Broader Economic Impacts
The ripple effects of the technology sector are set to influence the broader economy in profound ways. Workforce development initiatives, particularly in semiconductor manufacturing, are a bright spot. Arizona’s apprenticeship programs, for example, have demonstrated significant success, equipping workers with the skills needed to meet industry demands.
Additionally, infrastructure development will be critical to supporting this growth. As a growing hub for technology and innovation, Arizona anticipates a 35% increase in utility capacity demand by 2031. Investments in energy, water and housing infrastructure are paramount to accommodating the influx of businesses and residents drawn by the state’s favorable business environment.
A Balanced Outlook
While uncertainties abound, I remain optimistic about the role of Arizona’s technology sector in shaping economic growth for 2025. The sector’s resilience, coupled with strategic policy changes and investments in workforce and infrastructure, can mitigate some of the challenges on the horizon.
However, vigilance is necessary. Geopolitical developments, trade negotiations and domestic policy shifts will require companies to remain agile, adapting quickly to new realities. Collaboration between industry leaders, policymakers and local governments will be key to navigating this uncertain terrain.
We’re heading into a season of unknowns, but our technology sector has always thrived on its ability to adapt and innovate. With the right strategies in place, it can continue to be a major driver of economic growth in Arizona in 2025 and beyond.
Steven G. Zylstra is president and CEO of Arizona Technology Council and SciTech Institute. A renowned leader in the technology and innovation sectors, leading the Council since 2007, he was named to the Arizona Space Commission Board of Directors this past September.
Financial
Trending in 2025: Major Economic Ripples from Tariffs, Mass Deportations and Deregulation
from Kelly Skalicky of Stearns Bank
For 2025, I am clear-eyed about the economic and regulatory uncertainties, and I’m closely watching three key areas directly impacting the banking industry and our customers.
First, tariffs. As the U.S. economy recovered strongly from the pandemic with solid GDP growth and inflation lowering toward the Fed’s 2% target, the incoming Administration’s proposals for new tariffs are creating unexpected economic uncertainties. Like many economists, I believe the planned tariffs pose downside risks to our economy in 2025 — such as inflationary risks, higher prices for consumers and potential trade and supply chain disruptions. Also, the Fed signaled it may need to slow rate cuts in 2025 — likely two cuts rather than the four previously projected, which may keep rates higher, longer. For the banks, this means higher costs of funds; for borrowers, it will keep costs of borrowing higher. For Stearns Bank, with more than 30,000 business customers nationwide, it is vital we continue to provide our customers high-yielding deposit services and financing solutions that position them for success in good times and when facing economic unknowns. Our steadfast commitment to customer success and our bullet-proof balance sheet with nearly 20% capital are unique strengths, enabling us to be more agile and innovative in times of economic uncertainty.
Next, mass deportation plans. Mass deportation plans have been announced, which will impact everyone on a personal, community and national level. Through solely an economic lens, I believe mass deportations will create business disruptions and cause labor shortages across many industries, like agriculture, manufacturing and construction. Economists project mass deportations will drive up worker wages to levels that stifle overall economic growth. Data also shows the U.S. economy is dependent upon immigrant entrepreneurship as an economic driver. MIT reports immigrants are 80% more likely to start a business and create 42% more jobs than U.S.-born founders, highlighting the significant economic impact of immigrants in the U.S. For Arizona, economists estimate mass deportations would shrink the state’s economy by $48.8 billion annually, costing the state 10.1% of its tax revenues, and lead to the loss of 581,000 jobs. We serve many customers and communities across the country who are navigating potential impacts related to deportations, and we’re listening, understanding and supporting them in many ways.
And finally, deregulation. The new Administration is promising deregulation, including for banks, which could reduce bank regulatory safeguards, regulatory oversight and capital requirements. I may be an outlier, but I support strong regulations and increased capital requirements for all financial institutions. Stronger regulations and capital requirements create a safer-and-sound banking industry that results in more consumer protections. So, despite the enticement of deregulation or the allure of venturing into new, high-risk frontiers — like banking crypto under minimal or decentralized regulatory controls — I believe banks should resist the temptation to fuel growth by increased risk-taking with reduced regulatory environments. We should learn the lessons of the recent SVB and Silvergate failures, both of which were preventable had regulatory safeguards been maintained. We know both (and other) failures were fueled by unchecked growth, deficient regulatory controls and insufficient capital reserves.
With the collapse of Synapse in 2024, multiple cryptocurrency organizations under litigation, and the impact of banks’ laissez-faire attitude toward FinTech sponsorships, it’s important and timely to underscore that strong regulation provides much-needed bank guardrails and consumer protections. If banking regulations are pulled back and banks are not disciplined in maintaining strong capital and regulatory controls, we can expect to see more bank failures and serious economic troubles. But whatever the regulatory landscape looks like in 2025, Stearns Bank will stay disciplined and maintain strong capital and earnings, continuing to be well-positioned for growth to serve all our customers nationwide.
Kelly Skalicky is president and CEO of Stearns Bank, N.A. She holds a law degree and practiced in the areas of business litigation, commercial law, Indian law and commercial transactions. The daughter of Stearns Bank founder, Norm Skalicky, she began rising through the ranks at Stearns Bank by serving as legal counsel and being designated General Counsel in 2011.
Financial
Trending in 2025: State of the Arizona Insurance Market
from Scott Jones of Brown & Brown
As a whole, the Property & Casualty insurance market is seeing rate increases and decreases depending on the form of coverage. Here is a summary of the trends for the basic coverages a business might obtain.
Property: After a significant reduction in capacity in 2023, reinsurers are modestly increasing their appetite. We don’t anticipate significant softening in natural catastrophe insurance and reinsurance rates. For Arizona, property within wildfire areas will continue to see significant rate pressure. Poorly performing, protected or exposed risks will likely continue to experience double-digit rate increases. For those who have a newer building with the proper controls in place, the rates will have moderate increases and, in some cases, rate reductions. Those who have property that is built before 1990 or has significant claims history will see continued rate pressure.
General Liability: Flat to 10% rate increases are anticipated for most of the marketplace, with carriers focused on risk management, higher retention and loss prevention strategies.
Business Auto: Carriers face higher claims costs driven by increased accident severity, medical cost inflation, rising repair costs and nuclear verdicts, leading to stricter underwriting standards and higher premiums in an ongoing hardening market. Companies with auto fleets and high claims will pay well above standard premiums. Insurance companies would like to see cameras in fleet vehicles as they have been proven to reduce losses and protect against false claims.
Workers Compensation: While claims frequency has decreased due to improved workplace safety and automation, claims severity is increasing, driven by medical inflation and high indemnity costs. Arizona will see a 9% rate decrease in 2025. However, insurance companies will likely continue reducing policy credits to balance out the perceived premium necessary for the risk on the account.
Executive Liability: We expect rates to remain stable, with decreases in D&O policies. Commercial crime rates will remain flat, with social engineering fraud remaining the significant driver for claims.
Cyber Risk: We anticipate rates to continue forward with low single-digit rate increases. Underwriting standards are high, and, at a minimum, businesses need to include multi-factor authentication in their security plan to receive or retain coverage. Healthcare, professional services, education and manufacturing sector policies continue to be the most affected by cyber events, with a high frequency of business email compromise, ransomware and cybercrime claims. On the other hand, we anticipate continued rate pressure on professional liability coverage over the next year.
Surety: The surety industry expects continued growth via the Access Broadband Act and significant increases in data center and semiconductor/high-tech manufacturing buildouts.
For those with aviation exposure, the positive trend should continue with abundant capacity and a competitive insurance market.
Scott Jones joined Brown & Brown Phoenix in 2003, later leading New Mexico offices to success. Returning in 2016 as Phoenix president, he achieved consistent growth while fostering community involvement and earning accolades for workplace excellence and operational leadership.
Financial
Trending in 2025: Wealth Management and Investment Strategies
from Calvin P. Goetz of Strategy Financial Group
As we approach 2025, several economic trends are going to influence wealth management and investment strategies in the United States.
Economic Growth and Productivity: The U.S. economy is exhibiting robust growth, with the International Monetary Fund reporting an 11.4% GDP expansion since late 2019 and projecting a 2.8% increase for the current year.
This growth is largely driven by significant advancements in labor productivity, which has surged by 30% since the 2008–09 financial crisis, outpacing other advanced economies. Technological innovations, particularly in artificial intelligence, are central to this productivity boost.
Monetary Policy and Interest Rates: Bank of America forecasts a stabilization of U.S. GDP growth at approximately 2.3% in 2025, with core Personal Consumption Expenditures (PCE) inflation remaining at 2.8%. The Federal Reserve is anticipated to implement three interest rate cuts by mid-2025, bringing the terminal rate to a range of 3.75–4%. This monetary easing is expected to support economic expansion and influence investment returns.
Equity Market Performance: U.S. equities have outperformed global markets, with the S&P 500 rising over 24% in 2024, driven by the technology sector. Analysts suggest that policies from the incoming administration, including tax cuts and deregulation, could further bolster U.S. market dominance. However, potential risks such as trade disputes and rising inflation may introduce volatility.
Technological Innovation and Thematic Investing: Thematic investing, which focuses on macro-level trends like technological advancements, is gaining traction. Investors are increasingly targeting sectors such as artificial intelligence, robotics and automation, anticipating that these areas will drive future growth. This approach allows for diversification across multiple sectors aligned with specific themes.
Wealth Transfer and Demographic Shifts: The ongoing Great Wealth Transfer, involving baby boomers bequeathing significant assets to younger generations, is reshaping the economic landscape. This transfer is expected to impact various sectors, including housing, education and financial markets, as younger generations prioritize different investment preferences and consumption patterns.
Global Considerations: While the U.S. shows strong economic performance, global growth is projected to be around 3% in 2025. Factors such as new tariffs and immigration policies may slow the U.S. economy later in the year, affecting global markets. Investors should remain vigilant of international developments and their potential impact on investment.
After two back-to-back banner years in the stock market, investors would be wise to rebalance and take some profits off the table.
Calvin P. Goetz is CEO of Strategy Financial Group. Goetz is author of the books Climbing the Retirement Mountain and The Retirement Roadmap. A former Forbes Finance Council member, he has also contributed original articles on Forbes.com.
Nonprofits
Trending in 2025: The Transformational Power of Philanthropy
from Richard Tollefson of The Phoenix Philanthropy Group
According to GivingUSA, the definitive report on charitable giving in the U.S., philanthropy has been amazingly resilient over the past 60 years. With only four years of decline over that period, philanthropy continues to grow, achieving new levels of investment each year. Many in our sector, however, believe that we are experiencing — or approaching — a major crisis in generosity. An increasing trend is for fewer donors who make larger gifts, complicated by more complexity in how donors give; greater scrutiny of the nonprofit organizations invested in; and increased diversity in the demographics, giving patterns and institutional or issue loyalty of those who give.
Philanthropy has never been rooted in the true concept of democracy, an ideal where each person’s viewpoint is equally valued, everyone has an equal opportunity to impact our economy and society, and each dollar has the same value as any other. Philanthropy is a meritocracy, in which those who have more give more (in absolute dollars, but not as a percentage of their disposable income) and, in return, receive greater recognition and influence. While those at the top of the giving pyramid give and get more, it is important to pay attention to those at the bottom and middle of the pyramid because their consistent albeit lower level of support can often be used to cover operating expenses; and they are the major donors of the future as their wealth and influence and/or passion and commitment grow.
In 2025, added to these trends of the past decades will be the questions, changes and complexity that come with a new Presidential administration. Tax breaks may be made permanent, personal wealth may rise (or appear to rise, at least temporarily), and the rich will likely become richer. That could positively impact philanthropy. On the other hand, a strained middle class, combined with reduced government support for basic human needs, education, healthcare and more, means that there will be more people in need who must rely on the largesse of philanthropic people and institutions to close the gap. As experienced in 2016, the wave of giving to support the environment, social justice and healthcare organizations increased and accelerated, and was sustained over multiple years, because people feared that government would no longer act on their behalf, and that their personal philanthropy was critical to making a statement; expressing fear and anger, optimism or hope; and optimizing quality of life. Other donors also gave more, but in a more temporary fashion, to more conservative institutions aligned with their personal and political viewpoints.
I do not take a pessimistic view of philanthropy. I do not believe we are in a crisis. We are in times of fundamental challenge and change, and nonprofit leaders working with philanthropists must be ready to leverage and optimize that change.
I hope that we are not undergoing an existential threat to the American Way. If that happens, and if concepts of democracy, the rule of law, and a just and equal society as we have known them in the U.S. for hundreds of years goes away, all bets are off. But If that does not happen, and the political, economic and social pendulum swings — as it always has in the past — from left to right to left and on and on, nonprofit leaders working with individual and institutional philanthropists can and should be assured that people still want to build stronger communities, have clean water and air, educate their kids, support their neighbors, and create a quality of life that improves with each generation. While it is challenging to see in the day-to-day, I still believe in the fundamental good and generosity of the majority of people. I still believe people will devote their time, talent and treasure to make the world a better place. Philanthropy is the fuel that feeds that engine of positive, social change.
Richard Tollefson is founder and president of The Phoenix Philanthropy Group, an Arizona-based international consulting firm serving nonprofit organizations as well as institutional and individual philanthropists.
Real Estate
Trending in 2025: Real Estate Faces Demand of Population Surge
from Scott M. Drucker of Arizona REALTORS®
The real estate sector in Arizona serves as a cornerstone of the state’s economic growth. That should continue in 2025 due to the favorable cost of living, desirable climate and business-minded environment that Arizona has to offer.
As Arizona’s population continues to climb, so too does the demand for both residential and commercial real estate. The United States Census Bureau estimates Arizona’s current population to be roughly 7.5 million people. However, according to Arizona’s Office of Economic Opportunity, that figure is expected to reach close to 7.8 million residents in 2025, meaning that real estate will play an even greater role in driving our state’s economic growth.
Arizona’s housing market has been marked by limited supply and rising prices over the last several years, creating challenges for homebuyers. However, this demand has also led to new construction projects, which will ease supply constraints as we head into the new year.
In fact, according to the REALTORS® Property Resources October 2024 Arizona Housing Report, we are already seeing positive signs. Through October 2024, the Arizona residential housing market has seen a year-over-year increase of 23.7% in listings with a year-over-year increase in sales of 9%.
Nonetheless, housing affordability remains a concern, with a median sales price in Arizona of $439,000. Although slightly higher than the median sales price across the U.S. ($419,000), it is significantly lower than the growth rate experienced over the last several years.
To address the state’s limited housing supply and high demand, there is an increased focus on the development of affordable housing and multi-family units. Incentivization for affordable housing construction — including financial subsidies, regulatory changes to zoning and land use, streamlined approval processes, and strategic partnerships between state government and private developers — will assist in stabilizing home prices while offering more residential options. By way of example, in January 2024, the Arizona Department of Housing announced it had awarded $49 million in funding to 19 housing developers statewide to build more affordable homes and help alleviate Arizona’s housing crisis.
Although Arizona is not quite a “buyer’s market,” buyers are, and should continue to be, in a relatively stronger position than in recent years. Sellers will still see a fair market value for their property, especially if their home is competitively priced and they work with an experienced REALTOR® who has an in-depth understanding of the local market.
In addition to residential growth, Arizona’s commercial real estate sector is also undergoing a significant boom, with Phoenix in particular seeing a surge in demand for office, industrial and retail spaces. And as major companies like Intel, Taiwan Semiconductor Manufacturing Company and Lucid Motors are establishing or expanding their operations in the state, the commercial real estate market is benefiting from the flow of corporate investments. While this trend is expected to continue in Arizona’s business environment, investors and developers must still carefully consider local economic conditions, interest rates and long-term demographic trends to prove successful in 2025.
The real estate sector will also continue to play a crucial role in Arizona’s economic growth through 2025 by generating jobs in construction, architecture, engineering and related fields as new housing and commercial properties are developed. Increased property values also boost local tax revenues, allowing for investment in infrastructure and public services.
Arizona’s real estate market is well-positioned as a key component of the state’s economic expansion in the coming years. However, the real estate market is complex, as are both residential and commercial transactions. It is important for both buyers and sellers to use a knowledgeable REALTOR® to maximize available residential and commercial opportunities.
Scott M. Drucker is CEO at Arizona REALTORS®. These professionals help consumers navigate financial complexities such as mortgage rates and terms, appraisals and inspections, contract deadlines, and coordination with lenders. They also assist consumers in understanding local community elements like property taxes, public property information, price trends, and neighborhood details. Additional information can be found at www.hireazrealtors.com.
Real Estate
Trending in 2025: CRE to See Evolution of Office Spaces, Industrial Boom and Retail Transformation
from Vanessa Williams of CBRE
Phoenix is positioned for sustained economic prosperity in 2025, driven by significant advancements in the commercial real estate sector. The city’s economic landscape is being reshaped by robust job creation, population growth and substantial investments across various industries.
Phoenix’s economy continues to expand steadily, with job growth rates surpassing national averages. The labor market remains resilient, marked by low unemployment and rising personal incomes. Diverse industries, including technology, healthcare, manufacturing and tourism, support this economic vitality.
The CRE sector is a critical driver of this economic success. Several key trends are shaping the landscape in 2025. Demand for traditional office space is evolving as hybrid work models take hold. Companies are increasingly seeking flexible office solutions that prioritize modern amenities and sustainability. According to CBRE research, office space absorption returned to positive territory in Q3, with 31,349 square feet of space absorbed. Optimism surrounding return-to-office initiatives is expected to further strengthen office leasing activity into 2025 and beyond.
The growth of e-commerce continues to fuel demand for industrial properties, particularly near major transportation hubs. Warehouses, last-mile distribution centers and cold storage facilities are in high demand as companies emphasize efficient delivery and inventory management. Phoenix’s strategic location makes it an ideal market for these developments. Since the end of 2019, the metro has added more than 109 million square feet of industrial space, marking a 33.4% increase in total inventory.
Meanwhile, the retail sector is undergoing significant transformation. While many traditional stores are downsizing or closing, experiential retail spaces offering immersive experiences are rising. Shopping centers are being reimagined as mixed-use developments that combine residential, office and entertainment spaces. For instance, the redevelopment of Paradise Valley Mall on the northwest corner of Cactus Road and Tatum Boulevard saw its first phase open in the fall. This phase includes AVE Paradise Valley, a 400-unit luxury multifamily community, and a 50,358-square-foot Whole Foods Market. Additional restaurants and retail stores are set to open in the new year, creating a vibrant live-work-play environment.
Phoenix’s thriving CRE market is attracting significant domestic and international investment. This influx of capital is funding new developments and revitalizing existing properties, enhancing the city’s economic dynamism. The diversification of CRE uses — from industrial hubs to mixed-use projects — fosters economic resilience and positions Phoenix to navigate fluctuations while sustaining long-term growth.
In 2025, the commercial real estate sector will remain pivotal in shaping Phoenix’s economic trajectory. The evolution of office spaces, the industrial boom and retail transformation collectively create jobs, attract investments and diversify the economy. These developments have ensured that Phoenix remains a dynamic and thriving city for years.
An 18-year industry veteran and native Phoenician, Vanessa Williams is Arizona market leader and senior managing director at CBRE. She oversees Arizona business operations and drives the market’s growth strategy for all Advisory Service lines, including leasing, sales, debt and structured finance, valuation, and property management.
Legal & Government
Trending in 2025: What’s Politics Got to Do with Business?
from Wendy Briggs of Veridus, LLC
What now?
That’s what Arizona business leaders are wondering as the 2024 election is put behind us and a new slate of federal and state officials prepares to take office in January. The changeover has significant regulatory and policy implications for employers across every industry.
Government relations firms like mine are hired to keep our clients ahead of the curve. These are the issues we’ll be watching closely in the months ahead.
Trump Returns to Washington … With a Lot of Friends
The most significant transformation is occurring at the federal level, where President-elect Donald Trump and Republicans promise big changes upon taking control of the White House and both chambers of Congress.
Of high importance to employers, Trump has said he plans to extend a package of 2017 tax cuts —major portions of which are scheduled to sunset next year. Look for Trump and the GOP-led Congress to notch an early victory by moving quickly to extend the cuts and go even further — potentially reducing corporate income-tax rates and exempting workers’ tipped wages and overtime pay from taxation.
What about the other “T” word … tariffs? Trump boasted during the campaign about imposing aggressive tariffs to correct trade imbalances with other countries, particularly China. Many economists fear this will raise costs on consumers and may spark a trade war, though it’s too early to tell whether Trump tariffs are a real threat or merely a bargaining ploy.
Immigration policy also will figure heavily in 2025, as Trump is likely to seek significant changes to asylum rules and has pledged mass deportations. Depending on the size and scope of this effort, existing workforce shortages may be aggravated across migrant-heavy industries, especially agriculture, construction and hospitality.
Arizona industries like mining are following closely Trump’s promise to roll back a raft of environmental and other federal regulations. Thousands of Arizona jobs are at stake as multiple mining projects remain in various states of regulatory and legal limbo.
The Arizona State Capitol: Gridlock Returns
The election saw legislative Republicans strengthen their control of the Arizona House (33–27) and Senate (17–13). Couple that with a Democratic Governor likely to seek re-election in 2026 and you’ve got a recipe for political gridlock.
Housing and water will again be issues that loom over the legislative session. Arizona home prices and rental costs have escalated since the onset of the pandemic, and the state now ranks among the nation’s least affordable places to live. Build our way out of it? Not so fast. The state has stopped issuing building permits in parts of Pinal County and semi-rural areas south and west of Phoenix, saying a 100-year water supply is no longer assured. The coming year will bring renewed efforts to address both issues, including with legislation to encourage transition of irrigation-heavy farmland to housing.
Meanwhile, state policymakers face growing pressure to address shrinking aquifers in rural Arizona and an overdrawn Colorado River. Arizona is among seven states that rely on the Colorado River and continue to negotiate new terms for how to allocate its diminishing supplies. An agreement must be reached before 2026, when the existing compact expires, and the federal government may step in earlier if it appears talks are at a stalemate. Arguably no issue has bigger long-term ramifications for Arizona business and the economy.
Just halfway through her first term, Gov. Hobbs has already broken the state’s record for vetoes. Her veto stamp will again get a workout in 2025, no doubt. But there is at least one more major issue of economic significance where the Governor and GOP-led Legislature may find common ground: K–12 education.
Prop 123 is the Ducey-era funding mechanism that delivers nearly $300 million per year from the State Land Trust for Arizona K–12 schools. The measure will expire in 2025 unless voters approve an extension. Legislative negotiations fell apart last year, but look for a bipartisan legislative coalition to reach agreement and ask voters to approve a Prop 123 extension during a special election in 2025. This has real economic implications, as business leaders routinely cite the quality of local schools as a key factor they consider when determining where to locate and expand operations.
The end of the campaign always brings a sense of relief. Now, Arizona employers are anxious to see how all the promises and plans translate into policy and action. And remember: if you’re dissatisfied with this new iteration of state and federal government, the next general election is less than two years away!
A registered lobbyist and partner with Veridus, LLC, Wendy Briggs is a lobbying powerhouse with a reputation for taking on the toughest legislative issues and an unmatched record of success. In addition to being involved in regulatory, legal and campaign activities, she is widely recognized as one of Arizona’s most accomplished lobbyists and has been named the top female lobbyist in the state.
Legal & Government
Trending in 2025: Current Federal and State Laws Have Set Arizona Up for Technology and Housing Growth
from Alexis Glascock of Fennemore
President-elect Donald Trump’s decisions regarding the federal CHIPS Act will strongly impact Arizona’s growth as a new semiconductor manufacturing center for the nation. The CHIPS Act has been the source of large grants to Arizona chip manufacturers such as Intel and Taiwan Semiconductor Manufacturing Company.
TSMC’s $12-billion factory in North Phoenix is substantially complete. In December 2024, it announced plans to build a second factory that will open in 2026, bringing its total investment in the state to $40 billion. A large part of that investment was funded by the CHIPS Act, which also funded Intel’s plans also to build a new semiconductor manufacturing facility. Additionally, the CHIPS Act committed to a $400-million investment for Amkor, a semiconductor packaging company constructing a $2-billion manufacturing facility in Peoria.
The surge in semiconductor manufacturing in Arizona has already caused 24 suppliers for TSMC and Intel to buy, lease or otherwise announce plans to set up manufacturing in Arizona. Today, Arizona leads the nation in semiconductor investment, supplier expansions and jobs, as the Arizona Commerce Authority spells out on its website on Semiconductor Advantages (www.azcommerce.com/industries/manufacturing/semiconductor-advantages/). Since 2020, Arizona has won more than 40 semiconductor expansions, representing more than $102 billion in capital investment and more than 15,700 direct industry jobs. These projects span the entire ecosystem, including manufacturing, advanced packaging, research and development, equipment, supply chain and workforce development.
To fulfill the semiconductor workflow, The CHIPS Act provides $50 billion to train and develop Arizona’s workers. This funding allowed Governor Katie Hobbs to commit $48 million to Maricopa Community College so it could work in tandem with these companies and build classrooms for workers to be trained or retrained as the technology advances.
The concern voiced by some is that the new administration may hold back some of those investments or redirect them toward other industries. Arizona’s newly elected Republican majority U.S. Congressional delegation along with Governor Hobbs will need to work closely with the administration to ensure that these key investments are, in fact, provided to these semiconductor manufacturers and suppliers to assure the success of this industry in Arizona.
Other key state laws that drive Arizona’s economic engine are also front and center as we look toward 2025. HB 2720, Accessory Dwelling Units, mandates that cities with 75,000 or more residents must implement regulations before January 1, 2025, to allow at least one accessory dwelling unit in the house and one detached guest house. This law bars local governments from requiring additional parking, restricting advertising or requiring setbacks of more than five feet from the property line. There is some concern that the law will result in more short-term rentals and provide no additional long-term housing to urban residents.
The second new housing law to watch how it impacts our economy is HB2721, establishing requirements for middle housing developments. It applies to cities of 75,000 or more and prescribes that all lots zoned for single-family residential use within a mile of the community’s central business district allow for duplexes, triplexes, fourplexes and townhomes. It also states that multiplexes can be built outside the central business district in new developments of 10 acres or more anywhere in the city. While this will lead to more density, it will likely provide more housing as builders can construct multistory condominiums and apartments in areas where it is needed but previously prohibited by local regulations. With the smaller building footprints, this will reduce the cost for builders to acquire the land.
Arizona is poised to move full steam ahead in 2025 provided the new Administration leaves critical provisions and funding of the CHIPS Act in place. At the same time, our state is set up for continued growth bolstered by new laws designed to increase construction jobs and boost the housing supply for workers wanting to live in the cities where they work.
Alexis Glascock chairs Fennemore’s Government Relations and Regulatory Practice Group where she focuses on assisting businesses and associations to achieve their goals by advocating for or opposing changes to laws at the legislature, agency, county and municipal level.
Lifestyle & Leisure
Trending in 2025: Inflation ‘Eating into’ Restaurant Sales
from Steve Chucri of Arizona Restaurant Association
Rising menu prices and inflation greatly impacted the 2024 hospitality industry on a national and statewide scale. In September 2024, Arizona restaurant sales were up just 1.81% over September 2023. While year-to-date, total restaurant sales reached $16.793 billion, that is only 1.92% higher than last year.
Unfortunately, this shines the spotlight on the continuing trend of declining same-store sales and Arizona diners’ pull-back on spending at restaurants. With an adjustment for inflation, Arizona restaurant sales were down 3.97% through September 2024.
However, there is hope, based on stats at the national level. According to preliminary data from the U.S. Census Bureau, in September, eating and drinking places registered a total sales of $96.4 billion on a seasonally adjusted basis. This is 1% higher than the month prior and an indication that consumer willingness to spend on dining out is perhaps regaining actuation.
Despite inflation, the hospitality industry is still strong in Arizona and continues to serve as a robust contributor to the state’s economy. This summer alone, the Bureau of Labor Statistics reported that eating and drinking places, the primary component of the total restaurant and foodservice industry, added a net 19,500 jobs in July on a seasonally adjusted basis. This uptick is compared to June, which was revised from negative 3,100 to unchanged, and May, which was revised from an added 11,200 to an added 16,500.
Meanwhile, the increase in size of the industry workforce continues to expand its distance beyond pre-pandemic levels. In June of 2024, eating and drinking places were nearly 64,000 above their employment peak of February 2020. Eating and drinking places provide jobs for approximately 80% of the total restaurant and foodservice workforce of 15.5 million.
This is indicative that eating and drinking places are continuing their tireless efforts to rebound since the devastating impact of COVID closures and subsequent issues, including supply chain shortages and rapidly rising costs. The hospitality industry and its personnel are the backbone of the state’s economy. With the number of new restaurants opening their doors and the sheer number of people dining out on any given day, the Arizona restaurant industry continues to be an economic powerhouse for the entire state.
And, though quick service may have taken a hit in 2024, it appears the format, which really took off during COVID, is here to stay. Those looking to develop or grow in 2025 need to look at how to incorporate quick-service components into their current format, including digital point-of-sale systems, delivery options and other high-tech services that make dining out easy and convenient, without losing sight of the biggest component of success: high-quality customer service. While AI and other high-technology services are making dining out or dining to go more convenient than ever, most diners still want a hyper-personalized dining experience that can’t be replaced by a bot.
Eating and drinking places need to be responsive to what the diner wants. Trends for 2025 continue to be similar to 2024: sustainability, zero-waste practice and local sourcing, global ingredients presented in unique combinations as well as vegan and plant-based options.
In 2025, Korean and Vietnamese cuisines are going to inspire menus. Diners are looking for fermented and pickled foods, hot honey, cold brews, hyperlocal beers and wines as well as wellness drinks and creative spritzes. Customers are also looking for value and dining deals.
While trends come and go, it’s important to recognize that quality customer service and interaction transcends the trends. Creating a memorable experience for guests never goes out of style. So, while it’s crucial to embrace and encompass trends and advances in the industry into one’s hospitality business, it’s even more essential to provide an unforgettable experience, whether in a quick-service or fine-dining format.
Steve Chucri is president and CEO at Arizona Restaurant Association. During his more than 20-year career with the organization, Chucri has relentlessly advocated for and promoted businesses within the Arizona hospitality industry, which serves as an economic powerhouse for the state.
Lifestyle & Leisure
Trending in 2025: ‘Noctourism’ among Hot Destination Choices as Travel Remains a Priority
from Rachel Sacco of Experience Scottsdale
While I wish I had a crystal ball to see into the future, Experience Scottsdale leverages economic forecasts, trend reports and consumer sentiment studies from industry experts to help us hone our efforts to promote travel and tourism to Scottsdale.
Visitation has steadily increased since the pandemic, with Scottsdale welcoming 11.2 million visitors in 2023, the latest year data is available. Hotel research company STR at the time of this writing in mid-November forecasts that Scottsdale-area hotels and resorts will close out 2024 at 64.2% occupancy and will experience a slight increase in occupancy in 2025 at 65.4%. STR also anticipates Scottsdale-area hotels and resorts will see year-over-year increases in average daily rate and revenue per available room, key industry measurements.
No matter what may lie ahead in 2025, we have long known tourism to be a resilient industry. According to Tourism Economics, consumer spending will experience strong growth in the coming years, led by high-income households. The latest consumer sentiment study from Future Partners reveals American travelers’ financial status and outlook remains steady, and nearly half of American travelers are optimistic their households will be better off financially in the next year. Fifty-seven percent of American travelers say travel will be a high budget priority in the near term. Longwoods International’s study found that 91% of American travelers have travel plans in the next six months, and only 28% report that concerns about their personal financial situation would impact their decision to travel.
With travel remaining a priority, what types of trips will travelers be taking this year? Booking.com surveyed 27,000 travelers to predict the travel trends that will dominate 2025, including “noctourism” and longevity retreats. Nearly two-thirds of travelers are considering dark sky destinations, and 60% of travelers are seeking well-being itineraries that lead to longer, healthier lives. Expedia also compiled its trend forecast from the responses of 25,000 consumers, determining 63% of travelers will be looking to visit “Detour Destinations” to explore less well-known and less crowded spots. “Set-jetting” also remains a top trend, as two-thirds of travelers report film and television influence their travel choices.
Meetings and conferences are essential to Scottsdale’s tourism industry, traditionally accounting for nearly half of all occupancy and revenue at Scottsdale’s resorts and upper-moderate hotels. According to American Express Global Business Travel, about two-thirds of meeting planning professionals expect larger budgets for meetings in 2025 compared to 2024.
We have so much to offer those traveling to Scottsdale, whether for leisure travel, business travel or meetings. Throughout the year, Scottsdale will benefit from the return of our tourism-driving events like the Barrett-Jackson Collector Car Auction, WM Phoenix Open, Scottsdale Arabian Horse Show and Cactus League Spring Training in the winter and spring, as well as Canal Convergence in the fall. We’ll also see the opening of new hospitality businesses like The Remi Scottsdale Autograph Collection and Élephante Scottsdale, and the Grand Hyatt Scottsdale Resort & Spa will complete its rebranding, renovation and expansion.
As the destination marketing organization for the City of Scottsdale and Town of Paradise Valley, Experience Scottsdale will continue to share our destination’s stories and promote local hospitality businesses to potential visitors, meeting planners, travel professionals and media around the globe. Our programs and promotions will reach new audiences and new markets, helping drive leisure travel bookings, secure group business and generate positive media coverage. Scottsdale’s visitors generate $3.5 billion in annual economic impact and support the livelihoods of more than 27,000 people in the community, and it will remain an important economic driver not only for the city but also for the state in the year ahead.
Rachel Sacco is president and CEO of Experience Scottsdale, which she has led for nearly 40 years. In 2016, the Past Presidents’ Council of the Scottsdale Area Chamber of Commerce inducted Sacco into Scottsdale’s History Hall of Fame, recognizing her contributions to the hospitality industry.
Lifestyle & Leisure
Trending in 2025: West Valley Becoming Concert Central
from Sintra Hoffman of WESTMARC
The West Valley is owning the music scene. Consider: When Metallica toured in 2023, the band visited only eight cities nationwide — and Glendale was one of them (State Farm Stadium).
The VAI resort is coming online as a game changer, with its design focused on amplifying the music experience over and above offering an industry-leading concert venue.
Desert Diamond Arena in Glendale moved from hockey to attracting more concerts and the new home of the Arizona Rattlers. The departure of the Coyotes opened up opportunity for the city to invest in renovations to strengthen its attraction as a concert venue; the recently released details of the arena’s dramatic $42 million transformation from a traditional sports arena into a premier “music mecca” and entertainment destination spotlight that Glendale has become one of the largest entertainment and sports hubs in the western United States.
Set for completion in spring 2025, Desert Diamond Arena’s reimagination spans nearly 25 redesigned spaces in the venue and is expected to redefine live entertainment, offering fans dynamic ways to connect and celebrate their shared passion for music and events.
We’ve been known for sports and entertainment by attracting the Superbowl, Final Four, NASCAR Championship Race and other events that draw large, out-of-town visitors. But these venues are now hosting concerts in their off season.
Broader than the individual venues, we have exciting entertainment districts. The West Valley’s own downtown, Westgate, has a lot of unique restaurants that are always packed. It’s exciting to see the new and unique restaurant and entertainment venues such as Chicken N’ Pickle, Pop Stroke, Johnny’s Chicken and Waffles who all opened their first Arizona locations in the West Valley. Hotels as well, such as the boutique-style A Loft.
In the past four to five years, pretty much every West Valley city has started creating its own downtown as a mini entertainment center. The Boulevard in Avondale is a great walkable concept, ready to serve race and concert visitors in the area. GSQ in Goodyear is the West Valley’s newest downtown with anchor entertainment: The Stillery, offering live music nightly, has definitely leveled up the region’s nightlife. And the Village at Prasada — offering family entertainment with Fat Cats, bowling, movies and more — is part of the post-pandemic trend of people not wanting to drive any distances but rather stay local.
Desert Diamond Casino has a second property on the verge of opening as I pen this 2025 forecast, Desert Diamond White Tanks at San Lucy, further bolstering the West Valley’s entertainment repertoire. Sam Fox just opened Blanco and North Italia in a new walkable section of P83, with the West Valley’s first Postinos as their neighbor.
We anticipate continued growth to also increase visitors to our other attractions, which include outdoor recreation at Lake Pleasant and the White Tank Mountains, and cultural draws such as the Desert Caballeros Western Museum in Wickenburg and Theater Works in Peoria.
The West Valley already attracts more than 20 million visitors annually and is shaping up to be its own tourist destination.
An influential leader, Sintra Hoffman’s career is reflective her values — strengthening communities through sustainable relationships. With more than 25 years of experience in Arizona, she serves as president and CEO for WESTMARC, focusing on growing the West Valley’s economic vitality within the 15 communities she represents.
