THE PHOENIX TECH STORY How talent, a pro-business environment and quality of life are shaping the Phoenix tech scene TABLE OF CONTENTS 01 03 05 The Phoenix The Tech Population Workforce Tech Story Sector and Phoenix Roots 07 11 13 17 19 21 Workforce Education Cost of Doing Quality of Taxes Regulatory Business Life Policy THE PHOENIX TECH STORY 01 ©2018 GPEC & CBRE, INC. 02 >> This report examines the Phoenix value proposition to tech companies and how Phoenix compares to some of the most dynamic tech cities in the country. Although companies continue to operate—and in some cases, expand—in established markets such as the Bay Area, New York, Washington, D.C., and Seattle, rising costs and intense competition for talent have continued to motivate business leaders to consider alternative locations. The most competitive alternative locations are generally smaller, have a strong talent pool and business-friendly environment and also offer a high quality THE PHOENIX TECH STORY THE PHOENIX of life. Phoenix is an attractive place, not just because of its competitive advantage with regard to cost, but because of its deep talent pool; existing and growing portfolio of tech companies, universities and tech resources; and quality of life. Testimonials “Fueled by a diverse, motivated talent pool “For nearly two decades, University and an excellent transportation hub.” of Advancing Technology (UAT) has been committed to producing the best Bruce Hoechner cybersecurity talent in the world. This next CEO, Rogers Corporation generation of cyber warriors is ethically trained and thoughtfully prepared to thwart crime and protect our nation’s assets.” “The excitement behind the Phoenix technology scene is contagious… The value Jason Pistillo proposition of starting and scaling a business President, UAT in Phoenix is clear and has the attention of our friends in Silicon Valley, who are investing their dollars and creating jobs in “The talent pool in Phoenix is as robust our community.” as anywhere in the country … It’s the perfect place for startups—a supportive, Anthony Kaennada unpretentious community with no existing CMO, Gainsight status quo—so you don’t get lost in the crowd, and everyone plays a role in shaping it.” “Arizona is a wonderful state, ripe with Brad Jannenga talented people and a favorable business CEO, SaaS Industries environment. We are excited for the future.” Pat Hurley “Greater Phoenix is the only metropolitan VP Sales, Acronis [area] in America without natural disasters, which makes it perfect for data centers and fighting cyber crime. This is just one of the “Incredibly diverse, LGBTQ friendly, and a many reasons I chose to start and grow my surplus of tech and support talent.” business here.” Ben Hindman Ori Eisen CEO, Splash Founder & CEO, Trusona THE TECHNOLOGY SECTOR HAS DEEP ROOTS IN PHOENIX Phoenix Tech Timeline Greater Phoenix’s tech sector emerged following World War II, as the federal government spread outposts throughout the U.S. Phoenix quickly Motorola started became a hotbed for aerospace and defense a research and and semiconductor industries as companies development Intel initial expansion to Chandler, AZ servicing military operations started investing laboratory in Phoenix, AZ to research new in research and development labs in the solid-state technology region. The region evolved with the rise of the Boeing establishes internet age, becoming home to several large helicopter enterprise software development and web Microchip founded manufacturing facility hosting companies. Today, Greater Phoenix in Mesa, AZ is attracting expanding companies from New York to California due to its ability to attract top GoDaddy founded talent outside of high-cost markets. In recent On Semiconductor spins off from years, the tech ecosystem has progressed into Motorola a highly desirable market for next-generation Infusionsoft founded technologies focused on cybersecurity, autonomous vehicles, fintech, medtech and other WebPT founded industries related to the internet of things. Yelp expands sales office to Scottsdale, AZ Silicon Valley Bank expands back office functions to General Motors downtown Tempe, AZ Companies with Large Tech Presence establishes IT Innovation Center in Chandler, AZ Intel • Chandler Infusionsoft • Chandler Global cybersecurity 11,000 Employees 550 Employees company Kudelski Headquartered in Santa Clara Headquartered in Chandler Group relocates Uber and Waymo test corporate HQ to Charles Schwab • Phoenix Northern Trust • Tempe autonomous driving Phoenix, AZ 3,650 Employees 500 Employees technology in the Phoenix metro area Headquartered in San Francisco Headquartered in Chicago Intel announces $7B General Motors • Chandler Carvana • Tempe investment in Fab 42 700 Employees 479 Employees Arizona State on Chandler Campus University’s Fulton Headquartered in Detroit Headquartered in Tempe School of Engineering enrollment tops Uber • Phoenix JDA Software • Scottsdale 20,000, making it the Nikola Motor Co. 600 Employees 314 Employees largest engineering announces $1B Headquartered in San Francisco Headquartered in Scottsdale school in the nation investment for new HQ in Buckeye, AZ Source: Maricopa Association of Governments (2016); Phoenix Business Journal, Source: Greater Phoenix Economic Council. Book of Lists (2017-2018). 03 ©2018 GPEC & CBRE, INC. 04 >> Recent Tech Job Announcements TECH STORY THE PHOENIX Expected Total Company Function Location New Jobs Occupied SF Intel Manufacturing Chandler 3,000 7,200,000** USAA Software Development, Data Scientist, IT Phoenix 1,100 150,000 Willis Towers Watson Software Engineers, Customer Service Tempe 800 92,000 Orbital ATK Manufacturing Chandler/Gilbert 655 777,000** Endurance Intl. Group Sales/Customer Service, Software Developers Tempe 600 140,000 Zenreach Sales/Customer Service Phoenix 350 34,074 Amazon Software Development Tempe 300 81,405 Indeed Sales/Customer Management Downtown Scottsdale 300 52,641 Upgrade Inc. Customer Sevice Phoenix 300 34,070 Vixxo Web Developer, Analysts, Technicians Scottsdale 300 37,500* Dexcom Manufacturing Mesa 262 148,797 General Motors Software Devs, Database Admins, System Analysts Chandler 250 160,000 Nextiva Inc Software Developers, Customer Support Scottsdale 200 75,000 Oscar Health Customer Support Tempe 200 93,481 ZipRecruiter Sales/Customer Service Tempe 200 54,270 Benchmark Electronics Headquarters Tempe 170 63,000 Clearlink Sales/Customer Support Downtown Scottsdale 150 39,218 Freshly Customer support/ Engineers Downtown Phoenix 150 13,561 Houzz Sales/Client Services Tempe 150 32,206 MST Solutions Managers, Analysts, Architects, Developers Chandler 150 7,000 SAP SE Sales/Management Tempe 150 40,000 Valor Global Services Customer Support Scottsdale 120 15,000* Gabriel Partners Sales Support Downtown Phoenix 100 20,000 Ring Customer Support Glendale 100 25,904** Sitelock Sales/Customer Service, Software Engineers Scottsdale 100 54,000 Upgrade Inc. Customer Service, Credit Operations, Collections Downtown Phoenix 100 37,001 Microchip Technology Software Developers, Hardware/Product Engineers Chandler 85 1,093,622** OpenDoor Sales, Support, Operations Scottsdale 85 25,092 Solera Health Engineers, Account Managers Downtown Phoenix 80 19,300 Pivotal Payments Sales/Customer Service, Software Developers Scottsdale 70 26,000 Datashield Security Analysts Scottsdale 60 7,500* Mindtree Network Operations Engineers, Applications Operators Scottsdale 60 10,000 Mosaic451 Security Analysts, Network Engineers Phoenix 60 7,500* SiSense Sales/Management/Support Engineers Downtown Scottsdale 50 6,299 Aviage R&D/Manufacturing Peoria 40 5,000 Source: Greater Phoenix Economic Council, CBRE Research. *Estimate based on 125 sq. ft./person **Aggregate of all locations in Phoenix metro POPULATION Phoenix is one of the fastest-growing regions in the nation. The metro is home to more than 4.7 million people, and its growth is fueled by Median Age by Metro net migration. Over the last two decades, the metro has grown on average by 92,000 people annually. In 2017, the region added an average of 100 new households each day. Furthermore, Salt Lake City 32.1 metro Phoenix has a relatively young population with a median age of 35.8 years, falling below the national median of 38.2. Austin 34.0 Phoenix 35.8 Phoenix Population by Age Los Angeles 36.0 7.0% Denver 36.9 Less than 5 Chicago 37.0 20.2% 5-19 San Jose 37.3 21.6% Charlotte 37.4 20-34 Seattle 37.9 19.0% 35-49 U.S. 38.2 17.2% New York 38.6 50-64 San Francisco 39.2 14.9% Boston 39.4 65+ Source: Esri, U.S. Census Bureau, 2017. Source: Esri, U.S. Census Bureau, 2017. 05 ©2018 GPEC & CBRE, INC. 06 >> Change in Population of 20-34 Year Olds TECH STORY THE PHOENIX Phoenix Austin Charlotte Atlanta Denver Seattle Los Angeles 2010-2017 15.6% 15.6% 14.2% 12.2% 11.1% 10.3% 9.7% 2018-2023* 8.0% 12.7% 6.9% 6.5% 6.8% 5.1% 1.0% Salt Lake City Boston San Jose San Francisco New York Chicago 2010-2017 7.8% 7.8% 7.0% 6.5% 5.3% 3.8% 2018-2023* 1.4% 3.5% 4.9% 3.6% 1.3% -1.3% Source: Esri, U.S. Census Bureau, 2017. *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* 2018* 2018* 2018* 2018* 2018* Source: Moody’s Analytics, 2018. *Forecast WORKFORCE Greater Phoenix is one of the most rapidly expanding high-tech job markets in the nation. With more than 83,000 high-tech Phoenix is employees, metro employment has grown 33.5% over a five-year period. Phoenix tech employment not only surpasses many of its tech peers, such as Denver and Austin, but the place it also provides labor at a relatively lower cost than its competitive markets. Beyond its existing supply of high-quality talent, its to scale future labor pipeline is bolstered by one of the largest universities in the nation—Arizona State University—in addition to other major universities and college systems, ensuring employers will have access to talent that meets their future labor needs.