At this point, you’ve learned about the five most significant trends affecting the real estate of tech companies, labor, cost, density, flexible space, and generations. Rounding out the top six most significant impacts is cost.
Trend 6: Cost of living
Markets with the most exceptional tech job growth this cycle have also seen the highest increase in the cost of living. Many a talented tech professional will remain in the top markets, but there are many more that want all of the quality of living without the cost.
This is true for Phoenix. Phoenix has seen a 48 percent increase in people employed in tech occupations in the last five years, adding nearly 4,000 new tech employees in the previous year alone. Keeping pace with the current national trends, the metro Phoenix market has seen a significant increase in multifamily rental rates in recent years, ranking Phoenix in the top quartile of growth amongst US metropolitan areas. Furthermore, Phoenix continues to offer significantly lower cost of living across its metro market.
Besides the cost of living, Phoenix will continue to attract tech companies because of the education systems here. Top talent comes from Arizona State University and the University of Arizona, and much of this talent is staying in Phoenix after they graduate due to the high quality of life. A report from ASU shows that nearly 70 percent of undergraduate alumni and 48 percent of graduate students accepted jobs in Arizona.
Cost of living is a huge selling point for a city to attract new talent and new companies. Job growth and cost of living happen to be directly correlated. If a town has robust job growth, it only makes sense that cost of living would go up due to the city becoming a hot destination to land a job.
With large metro areas on the coasts getting more expensive each year, a low cost of living is a huge selling point for cities looking to attract new talent and new companies. However, job growth in those cities is somewhat a gift and a curse, as in-migration begins to raise the cost of living that attracted people in the first place. Not surprisingly, these low-cost markets will start to see an uptick in the expenses of living as more tech professionals begin to appreciate the quality of life in these affordable cities.