Whether it’s landing among the top cities of CBRE’s Annual Tech Talent Report, a New York Times article applauding the revitalization of our urban core, or the Tuft & Needle “WE BELIEVE IN PHX” billboards popping up throughout the city, Phoenix is transforming its image from a sprawling, desert retirement community to a bustling world-class city. At 519 square miles, we are definitely a massive city, but our distinct employment corridors, deep labor pool and smart investments in infrastructure provide the variety and quality desired by many of today’s top employers.
And, many companies are establishing themselves or extending their current operations in Phoenix. San Francisco-based companies like Uber, DoubleDutch, Gainsight and StitchFix each recently made expansions into Phoenix. This year, Swiss cybersecurity company Kudelski and North Carolina-based Carlisle Companies, a global diversified manufacturing company, announced headquarter relocations to the city. Phoenix has also been selected recently as the location of choice for large regional operations, such as the 1,000-plus-employee Farmers Insurance build-to-suit project.
Incorporated in 1881, Phoenix remains the youngest of the nation’s largest cities. It is in our nature to grow and reinvent ourselves, and Downtown Phoenix portrays the entire city’s evolution. As Phoenix’s Deputy Economic Development Director, I often tell people, “If you haven’t been to Phoenix in the last three years, you haven’t been to Phoenix.” The reasons go beyond the investments in light-rail, an award-winning convention center, sporting venues and construction cranes on every horizon. The game changers were thoughtful planning and really gutsy decision-making by city leadership and forward-looking business people.
The city assembled land to entice Arizona’s three state universities to build campuses downtown. Ten years ago there were just 400 students, but this fall, there will be more than 12,000. The Phoenix BioMedical Campus is a 30-acre urban medical and bioscience campus that generates the economic equivalent of two Super Bowls each year. Downtown Phoenix is home to some of the state’s largest venues and the coolest neighborhood dives. More than 4,800 downtown residential units are in the pipeline. That blend is drawing more creative companies to lease and modernize space in office towers that used to house law firms and government services.
The Colliers International Q1 2016 Multifamily report indicated, “Renter demand for multifamily units is being fueled by strong job growth. Nearly every employment sector is expanding, and companies are relocating to Greater Phoenix from other markets. The outlook calls for employers to add approximately 75,000 new jobs in 2016.”
Our department’s prospect activity levels strongly reflect that. Phoenix continues to attract financial, professional and tech-sector jobs that will support tenant demand for office space. CBRE Econometric Advisors forecasts healthy job growth for the Metro Phoenix area in the second half of 2016, with office-using employment expected to grow by an average of 3.3 percent annually during the next two years. But the opportunities for Phoenix’s continued growth aren’t just limited to the urban core and office product. All of Phoenix’s employment corridors are showing steady activity and our pipeline of potential industrial users continues to demonstrate why the Metro Phoenix industrial vacancy reached what Cushman and Wakefield reports as the “lowest recorded rate (9.6%) since before the recession in 3Q07 (8.6%).” All of these factors are changing the landscape long term for Phoenix.
Our office works with the talented members of NAIOP on a daily basis and we are pleased that NAIOP selected Greater Phoenix and our neighbor Scottsdale as the location for this year’s Commercial Real Estate Conference. While you’re here, I hope you’ll get to know our skyline, funky warehouse district, new industrial product, contemporary midrise office buildings at the edges of this big city and everything in between. Really – if you haven’t been to Phoenix in the last 2-3 years…
“We Believe in PHX” photo by Pam Lindley.