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2020 Edition 01 03 05 07 10 12 THE GREATER PHOENIX TECH STORY 2020 EDITION 01 03 05 07 10 12 The Greater Population Workforce Education Coworking Greater Phoenix Tech Phoenix Roots Tech Story TABLE OF CONTENTS 14 15 17 19 20 21 23 Data Company Cost of Venture Regulatory Operational Quality of Centers Profiles Doing Capital Policy Affordability Life Business and Private Equity THE GREATER PHOENIX TECH STORY 01 ©2020 GPEC & CBRE 02 >> Greater Phoenix is an emerging tech market. The region is sought after for its talent, collaborative environment, business-friendly culture and quality of life. Emerging tech companies choose Greater Phoenix to establish their footprints, test their technologies and scale. Over the last 70 years, Greater Phoenix has created a diversified tech ecosystem home to R&D, high- tech manufacturing, software companies and next-generation technologies. Today, there are roughly 500 software companies that call Greater Phoenix home. Companies including GoDaddy, Carvana, and LifeLock went from startups to household names right in our own backyard. New and innovative companies from coast to coast and around the globe seek Greater Phoenix where they can secure top talent and provide a high quality of life for their employees. STORY PHOENIX TECH THE GREATER Talent and Education Collaboration Startups and established tech firms alike find The Greater Phoenix ecosystem has enabled that Greater Phoenix works for them. Over long-time businesses, emerging disruptors, 85,000 high-tech employees are in the region. educational institutions and the public to work Tech companies can leverage the large and together to better the region. In Phoenix, it is talented workforce fueled by Arizona State easy to be new. The collaborative environment University, the largest engineering school of public-private partnerships propel in the nation, where 24,000 engineering innovation in the region. The unity of the students are enrolled. The numerous career- region has led to technological advancements, based learning initiatives and bootcamps new ventures and startup growth. offer learning opportunities to an emerging workforce preparing for diverse industries. Business Culture Quality of Life The region’s business-friendly culture fosters Greater Phoenix offers an affordable quality entrepreneurial spirit. Local officials continue of life unmatched by competitor tech hubs. to support emerging technologies and Businesses and tech talent find relative pioneering policies allow businesses to thrive. affordability in housing and office rent highly The FinTech and PropTech Sandbox provides attractive qualities. Rising costs and intense entrepreneurs a testing ground without competition in competitive markets have burdensome regulatory costs. Available motivated talent and businesses to seek incentive programs allow businesses to grow alternative locations and some now call and retain the region’s top talent. Greater Phoenix home. THE TECHNOLOGY SECTOR HAS DEEP ROOTS IN GREATER PHOENIX Phoenix Tech Timeline Greater Phoenix’s tech sector emerged following World War II as military installations proliferated throughout the U.S. Phoenix metro quickly became a hotbed for the Motorola started aerospace, defense and semiconductor industries as a research and Intel initial expansion companies servicing military operations started investing development laboratory in Phoenix, AZ to to Chandler, AZ in research and development labs in the region. Motorola research new solid-state became one of the first tech companies in Greater Phoenix technology with the establishment of a research lab in 1949. The Boeing establishes region evolved with the rise of the Internet age, becoming helicopter home to several large enterprise software development Microchip founded manufacturing facility in Mesa, AZ and web hosting companies. In recent years, the tech ecosystem has progressed into a highly desirable market GoDaddy founded for next-generation technologies focused on cybersecurity, ON Semiconductor autonomous vehicles, FinTech, MedTech, PropTech and spins off from other industries related to the Internet of Things (IoT). Motorola Keap, formerly Infusionsoft, founded WebPT founded Yelp expands sales office to Scottsdale, AZ Large Tech Companies in Phoenix Silicon Valley Bank expands back Intel - Chandler General Dynamics - Scottsdale, Phoenix office functions to 10,400 Employees 4,131 Employees General Motors downtown Tempe, AZ Headquartered in Santa Clara, CA Headquartered in Falls Church, VA establishes IT Innovation Center in GoDaddy - Scottsdale, Tempe, Gilbert Avnet - Phoenix, Chandler Chandler, AZ 3,316 Employees 3,153 Employees Opendoor chooses Headquartered in Scottsdale, AZ Headquartered in Phoenix, AZ Greater Phoenix for its first market expansion Microchip - Chandler NXP Semiconductors - Chandler Global cybersecurity 2,000 Employees 1,786 Employees company Kudelski Headquartered in Chandler, AZ Headquartered in Eindhoven, Netherlands Group relocates corporate HQ to Uber and Waymo test Yelp - Scottsdale Insight - Tempe Phoenix, AZ autonomous driving 1,300 Employees 1,025 Employees technology in the Headquartered in San Francisco, CA Headquartered in Tempe, AZ Phoenix metro area ON Semiconductor - Phoenix Medtronic - Tempe Intel announces $7B 1,000 Employees 750 Employees investment in Fab 42 Headquartered in Phoenix, AZ Headquartered in Dublin, Ireland on Chandler Campus Arizona State University’s Fulton School of Axon Enterprise - Scottsdale Cisco Systems - Phoenix Engineering enrollment 721 Employees 690 Employees tops 20,000, making it Headquartered in Scottsdale, AZ Headquartered in San Jose, CA Nikola Motor Co. the largest engineering announces $1B school in the nation Nextiva - Scottsdale Uber - Phoenix investment for new 660 Employees 600 Employees HQ in Phoenix, AZ Headquartered in Scottsdale, AZ Headquartered in San Francisco, CA Microsoft, Compass Data Keap - Chandler JDA Software - Scottsdale Centers, Stream Data 450 Employees 425 Employees Centers and Vantage Source: Maricopa Association of Governments (2019); Phoenix Business Journal, Book of Lists (2019-2020). Maricopa Association of Governments Source: Headquartered in Chandler, AZ Headquartered in Scottsdale, AZ Data Centers announce Source: Greater Phoenix expansion into Phoenix’s Economic Council. West Valley 03 ©2020 GPEC & CBRE 04 >> Recent Tech Job Announcements COMPANY LOCATION EXPECTED NEW JOBS NEW OCCUPIED SF Infosys Tempe 1,000 60,000 Deloitte Gilbert 900 100,000 THE GREATER PHOENIX TECH STORY PHOENIX TECH THE GREATER Opendoor Tempe 500 100,000 Choice Hotels International Scottsdale 500 150,000 AKOS Phoenix 400 136,000 Honeywell Aerospace Phoenix 327 35,000 Silicon Valley Bank Tempe 300 60,000 Sendoso Scottsdale 260 36,000 Experis Game Solutions Tempe 200 42,000 Zillow Scottsdale 160 19,550 Hawaiian Airlines Tempe 150 16,998 Synchronoss Phoenix 110 38,000 Microsoft Goodyear 110 740,000 Zillow Scottsdale 106 25,000 AppZen Tempe 102 10,000 Acronis Scottsdale 99 20,000 Myndshft Technologies Mesa 80 11,000 CAVU Aerospace Mesa 75 281,000 Black Pearl Mail Scottsdale 70 2,500 WanderJaunt Phoenix 60 3,400 Lemonade Scottsdale 50 5,000 Compass Data Centers Goodyear 45 415,632 The Nerdery Phoenix 45 8,137 Vantage Data Centers Goodyear 40 276,000 Arizona Isotopes Corporation (AZI) Goodyear 30 45,000 Prevalent Phoenix 20 5,808 Hownd Tempe 15 20,000 IMNA Solutions Scottsdale 10 1,000 Insurmi Phoenix 10 - Source: Greater Phoenix Economic Council, CBRE Research. *Job announcements publicized by expanding and new-to-market companies include projections of new jobs that are typically added over a one- to three-year period. Square footage is approximate. POPULATION Greater Phoenix is one of the fastest-growing regions in the nation. The metro is home to more than 4.9 million people, where net migration fuels growth. Over the last two decades, Greater Phoenix Median Age by Metro has grown by 93,000 people each year on average. The region adds over 250 people each day, making Greater Phoenix the second fastest growing region. Salt Lake City 32.8 Furthermore, Phoenix metro has a relatively young population with a median age of 36.9 years, falling below the national median. Austin 34.9 Denver 36.6 Fastest Growing Metros Phoenix 36.9 Year-Over-Year Growth (Change in thousands) 131.8 Seattle 37.0 Los Angeles 37.1 96.3 91.7 San Jose 37.1 75.7 Charlotte 37.4 60.0 54.9 53.1 51.9 51.4 49.9 Chicago 37.7 U.S. 38.2 New York 38.8 Boston 38.8 Dallas Austin Tampa Seattle Atlanta Orlando Phoenix Houston Riverside San Francisco 39.1 Washington D.C. Washington Source: U.S. Census Bureau, 2019. Source: U.S. Census Bureau, 2019. 05 ©2020 GPEC & CBRE 06 >> Change in Population of 20-34 Year Olds Charlotte Phoenix Austin Atlanta Denver Salt Lake City Seattle THE GREATER PHOENIX TECH STORY PHOENIX TECH THE GREATER 2010-2018 16.7% 14.2% 19.8% 11.3% 20.2% 5.7% 19.7% 2019-2024* 11.0% 7.2% 7.2% 7.2% 6.6% 6.6% 2.7% Boston San Francisco Chicago New York San Jose Los Angeles 2010-2018 13.4% 11.9% -0.3% 2.7% 13.5% 5.3% 2019-2024* 2.2% -0.1% -0.1% -0.7% -0.8% -2.4% Source: U.S. Census Bureau, 2019; Oxford Economics, 2019. *Forecast Phoenix’s Robust Population Growth Driven By Net Migration Net Migration Natural Increase Historical Average 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020* 2021* 2022* 2023* 2024* Source: Moody’s Analytics, 2019. *Forecast WORKFORCE Greater Phoenix is one of the most rapidly expanding high-tech job markets in the nation. Greater With more than 85,060 high-tech employees, metro employment has grown 12.3 percent over a five- year period. Greater Phoenix not only surpasses Phoenix is many of its tech peers, such as Chicago and Los Angeles for tech employment, but it also provides labor at a relatively lower cost than its competitive the place markets. Beyond its existing supply of high-quality talent, Greater Phoenix’s future labor pipeline is bolstered by the presence of several highly-rated public and private universities, including Arizona to scale State University, The University of Arizona, Grand Canyon University and Northern Arizona University.
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