It’s no secret that the Phoenix metro area is a budding region for the tech industry. In May, Phoenix was named by PCMag as one of “14 high-tech cities you’ll want to call home.” Ask anyone who’s a longtime resident, and they will tell you how much things have changed here over the years. Tech companies have been opening branches and getting their start, in downtown Phoenix as well as in surrounding towns like Tempe, Mesa, and Scottsdale.
While incoming tech companies are great for providing employment and bringing in retail and services revenue, they also give the real estate market a boost. Commercial real estate agency JLL’s Phoenix office recognized this trend and created a video about the tech real estate outlook for the Valley.
The video’s narrator, Matt Coxhead, notes that many tech companies can no longer afford the skyrocketing rent and other costs in traditional tech hubs like Silicon Valley. Over the past few years they’ve been seeking smaller markets that still offer diverse talent and opportunities for continued growth—and Phoenix has stood out to many. According to the video, Phoenix has seen VC investment more than double since 2009-2010.
Part of Phoenix’s attractiveness comes from its relatively cheap lease rates. According to the video, lease rates in Phoenix can be as much as 33 percent of the cost as they are in Silicon Valley, and even among secondary markets like Portland and Salt Lake City, they can be around 30 percent lower.
Having a university as innovative and driven as Arizona State nearby also makes Tempe an attractive location for tech companies. ZipRecruiter and LifeLock, among others, have offices in Tempe. The video notes that this desirability has caused lease rates in north Tempe to increase in the past few years, but there are still opportunities for lower rates on the outskirts of downtown Tempe. It seems like there’s constantly construction going on in Tempe, and because of new projects and buildings planned, Coxhead says the town “could look much different in the next three to five years.”
South Scottsdale is another region singled out for its growing tech sector, including companies like Weebly and Yelp. While Tempe has ASU’s main campus, Scottsdale is known for its huge restaurant and nightlife scene, and it has a large population of college-educated individuals—both big benefits for tech companies. The video also credits ASU’s SkySong Center for bringing in companies and fostering an entrepreneurial environment, and Coxhead says the center is part of the reason south Scottsdale will continue to grow.
JLL’s video ends by returning to downtown Phoenix, highlighting the Warehouse District as an exciting place for tech companies, led by WebPT and Galvanize. The rise of co-working spaces and accelerators like CO+HOOTs and SEED SPOT, and events like Phoenix Startup Week, indicate just how much innovative activity is thriving in the area.
If growth remains on this trajectory, the Phoenix metro area, including the real estate market, will continue to prosper in the next few years.