In CBRE’s recently released annual Tech-30 report, Phoenix has emerged as a formidable contender, securing its position among the top tech hubs in North America. The report highlights the city’s remarkable achievements in office leasing, rent growth, and high-tech job expansion throughout 2021 and 2022.
Phoenix’s Tech Ascension
Phoenix’s tech job growth rate of 13.4% during the years 2021 and 2022 propelled the city to an impressive #10 ranking in this year’s Tech-30 report, a significant leap from its #13 spot the previous year. The city also clinched the 13th position in office-rent gains, boasting a substantial 6.3% increase, further solidifying its status as a burgeoning tech hub.
Tech Submarkets: Tempe Takes the Lead
Within the Valley, Tempe stands out as the premier tech submarket, securing the fourth spot among Tech-30 submarkets in rent growth gains with an impressive 14%. Tech submarkets situated near universities and major tech employers, such as Tempe’s proximity to Arizona State University, typically enjoy higher rents, lower vacancy rates, and superior office spaces.
Office Rental Trends and Demand
Despite negative absorption trends, the demand for high-quality office space in Phoenix remains robust. CBRE‘s report indicates a steady need for office spaces, as evidenced by increasing rents. Notably, the report found that office rental rates in leading tech submarkets carried a 10.2% premium in Q2 2023 compared to rents for their cities as a whole.
Tech Industry Impact and Leasing Activity
The tech industry has exhibited resilience and growth, with its share of total office leasing activity increasing each quarter this year. In Q3 2023, the tech industry reclaimed its position as the top sector in office leasing activity, accounting for 16.5% (7.3 million sq. ft.) of total leasing activity. This resurgence comes after a 10-year low of 9.3% in Q4 2022.
Phoenix’s Robust Tech Workforce
Phoenix’s tech workforce, totaling 103,176 individuals, accounts for 8.5% of all office-using positions in the city. The city’s sustained growth is further fueled by venture capital funding, with Phoenix-based companies securing $191 million in the first half of this year, with 60% allocated to tech companies.
Phoenix’s ascent in the Tech-30 rankings underscores its thriving tech ecosystem. With robust job growth, increasing office leasing activity, and a substantial-tech workforce, Phoenix has firmly established itself as a dynamic and sought-after tech hub in North America.
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Source: Az Big Media , CBRE