While the country has been wrapping its head around all the craziness with Amazon’s decision to not build a headquarters in Queens, New York, Phoenix has been continuing its hot streak of cutting itself out as a burning tech landing spot without any newsy controversy to boot. That’s what the folks at CBRE are saying in the global investment and research firm’s 2018 Tech-30 report, which measures the top 30 tech markets in North America. Phoenix landed at number 6 on the list in terms of growth rate in the past two years.
The report looked at tech office net absorption, or the amount of office space and the rate at which it has been purchased in recent years. While that’s awesome news for the state’s capitol, it’s the adjoining city of Tempe that found itself at number 4 on the list. All this movement for both cities and the area as a whole is due to major moves from global tech companies buying up space to expand operations and new startups deciding to stick around here instead of looking to set down roots in places such as Silicon Valley, Austin and New York.
“Tempe has created a community that is a microcosm of what is great about Arizona: great accessibility to a young and knowledge-based workforce (median age is 28 and 42% of residents have a bachelor’s degree or better), Arizona State and the University of Advancing Technology are producing technology-proficient graduates in engineering, software, development, computer science, etc.,” says Maria Laughner, Economic Development Program Manager, City of Tempe.
Tempe already has office space for ZipRecruiter, Amazon, and Microsoft. NASA is testing out aerospace projects in Tucson. Scottsdale is making way for software giant Oracle at SkySong Innovations. Apple bought up warehouse space in Mesa; and so forth. Tech is going like gangbusters in Arizona in everything from autonomous vehicle testing to development and research projects to data security to news about new innovation campuses in downtown Mesa.
This is all helping to not only attract major tech companies but a hungry workforce looking for a successful future in the industry without shelling out major bucks to live in San Francisco or New York City.
The growth in Phoenix’s tech offices is complementary to its jump in tech job growth recently. The general Phoenix area now employs more than 57,000 workers in high-tech software and services positions. That number represents a more than 200 percent boost in the past 15 years.
Space availability in tech markets like the old standby cities continues to tighten, making Phoenix, Tempe, Mesa, and Scottsdale that much more attractive. Large tech companies looking to expand their reach and build out their workforces can take advantage of more affordable real estate costs and a ready-made workforce fresh out of college and tech schools here.
“I think our urban development is what is most attractive to tech workers from other parts of the country. We have a very well-planned urban environment that promotes transit in many forms which has historically been attractive to the tech sector,” Laughner said. “This combined with our fabulous amenities and quality of life, low cost of living, and accessibility to everything makes Tempe attractive.”
Phoenix is still comparably cheap to set up shop with office rent rates of $25.61 per square foot—that’s less than half the rate in Silicon Valley and a touch over one-third of the rate in New York and San Francisco. Tempe, on the other hand, is seeing numbers tick up consistently as tech companies opt for the college city instead of the capitol. The going rate as of press time is $29.81 per square foot, according to the CBRE report.
Currently, there are 2.9 million square feet of office space under construction and 1.9 million square feet of sublease in Phoenix. Companies are looking at plots of land in areas like south Scottsdale and Chandler as well. The major draw for those areas is related to a direct pipeline of workers graduating from ASU, U of A extended campuses and working professionals with years of experience in IT.