Metro Phoenix is seeing its demand for tech workers driving the office market momentum as a new CBREreport ranks the Valley 20th out of 50 markets.
Phoenix is also ranked as the third most cost-effective in large tech talent markets, 14th in the largest tech talent labor pool and sixth in terms of growth, according to the report.
The CBRE Research report “Scoring Tech Talent”ranks 50 U.S. markets according to their ability to attract and grow tech talent.
The top 10 large markets, according to the report’s tech talent score card, are Silicon Valley, Washington, San Francisco, the San Francisco Peninsula, New York, Seattle, Boston, Baltimore, Austin and Atlanta. These markets each have a talent pool of more than 50,000 tech professionals.
Phoenix has been able to rise to 20th on the list because of many tech companies either moving to the region or expanding, including Zenefits, a San Francisco-based human resources tech company that expanded to Scottsdale in November; Weebly, a San Francisco-based website creation service that moved into Scottsdale last June; and ZocDoc, a New York-based online medical scheduling service that opened in Scottsdale in 2012.
I wrote about the tech boom moving into Scottsdale in this October 2013 cover story.
This growth is a direct result of available talent and the cost-effectiveness of locating in metro Phoenix, said Bryce Terveen, the first vice president who leads CBRE’s Tech and Media Practice Group in Phoenix.
“For the past two years, the high-tech industry has not only spurred the economy as a whole, but it has been the top driver of commercial office activity, influencing rents and vacancy in major markets across the U.S., including Phoenix,” Terveen said in a statement.
When looking at which markets present the greatest cost for occupiers based on wages paid to employees and rent paid for office space, Phoenix ranked third among the top five most cost-effective large markets. Detroit and St. Louis were the top two, followed by Dallas-Fort Worth and Atlanta rounding out the top five.
Silicon Valley has the highest costs and Detroit had the lowest in large markets, according to the report.
“As more technology companies look to expand outside of high-cost markets like San Francisco and New York, Phoenix becomes an attractive option,” Terveen said.
The talent growth rate in metro Phoenix from 2010 to 2013 was 31.7 percent, placing it No. 6 in overall tech-talent growth momentum.
“Tech talent growth rates are the best indicator of labor pool momentum and it’s easily quantifiable to identify the markets where demand for tech workers has surged,” Colin Yasukochi, director research and analysis for CBRE, said in a statement. “Tech talent growth, primarily within the high-tech industry, has recently been the top driver of office leasing activity in the U.S.”
Locally, office leasing trends have mirrored national trends and technology-driven leasing in Phoenix has doubled since 2012. In 2014, 10 percent of all office leasing activity came from the high-tech industry, according to the report.
Tech talent comprises 3.4 percent, or 4.4 million, of the total U.S. workforce. However, the high-tech industry accounts for more major U.S. office leasing activity than any sector in both 2013 and 2014, according to the CBRE report.