Cushman & Wakefield illustrates growing Phoenix sector in new report
By Terrance Thornton | Digital Free Press
A report produced by Cushman & Wakefield notes the city of Phoenix and metropolitan area as an emerging epicenter of high-tech jobs, innovation and production.
“It goes without saying that it is a great honor to be included in the list of top tech markets in the Americas,” said Jared Lewis at Cushman & Wakefield’s research division.
“Being included in this list speaks to the growth and diversification of the metro Phoenix economy and the disciplined work of many to help drive and achieve the transformation to a more balanced economy. We have seen that industries often tend to cluster in markets where their peers have found success across a variety of metrics which often include a business-friendly climate, growing labor pool and relatively lower operating costs.”
Found a part of the report coined “Tech Cities: The Global Intersection of Talent and Real Estate,” the document examines the top drivers for tech occupiers, identifies the top global tech markets and the impact of tech companies on commercial real estate.
Mr. Lewis says several factors are playing a role, but one keynote factor is Arizona State University and its engineering education programs.
“A significant factor to the success of Phoenix is Arizona State University, which is one of the largest engineering schools in the country and named the nation’s top innovation school for seven consecutive years. The high level of education in the region not only brings large tech companies, but also creates a constructive environment for entrepreneurs in the tech space.
On a global scale, tech is a larger portion of major economies — and commercial real estate — than ever before, Cushman & Wakefield executives contend. Turns out, across the largest 15 global economies, information and communication employment increased by nearly 23 million workers, and it is forecast to grow by 17%, adding another 12 million workers over the next 10 years.
“The tech sector will remain a driving force for economies around the globe,” said David C. Smith, global head of occupier insights at Cushman & Wakefield. “Even with the recent volatility in the economy, demand for tech talent will not abate anytime soon. Because of this, the evolution of cities as clusters for tech talent and tech occupiers will remain critical to commercial real estate decision makers.”
‘The Parque’ in Scottsdale seeks to fill gap
Cybersecurity pioneer George Kurtz has envisioned a place where innovative digital companies can find affordable, quality and enticing space to grow and develop their ideas.
Mr. Kurtz told the Arizona Digital Free Press last month living in a post-pandemic world entrepreneurs and business leaders in high tech are looking for alternative destinations aside from tried-and-true silicon destination points.
“It is a perfect model to me: to infuse technology and sustainability,” he said of the forthcoming development coined “The Parque.”
Mr. Kurtz is a true pioneer of the digital age as co-founder and CEO of CrowdStrike, founder of Foundstone and chief technology officer at McAfee. Mr. Kurtz is a wunderkind of the digital community, coding his first video games with the archaic Commodore 64 operating system.
“I have been in the tech field for over 30 years, and it seems to me we need to be infusing more technology into organizations like Arizona State University. The overall goal I see in a post-pandemic world is people are looking for new places where they can have a real work-life collaboration,” he said.
Mr. Kurtz contends function is a major component of the envisaged development atop about 32 acres at 16001 N. Scottsdale Road.
“A big part of business here is to create a functional area that makes sense, which is sustainable,” he said. “With the focus of taking Scottsdale to the next level in the tech sector.”
Mr. Kurtz points out his success in technology has come on the software side and while chip manufacturing is a key piece of the technology ecosystem, there ought to be more of a focus on incubating software innovations.
“People are looking for places to go outside of the Bay Area,” he said of the typical high-tech destinations of the world. “They are looking for high-tech jobs, opportunities. And while chip manufacturing is great and creates a great base for software technology, we are looking to attract capital to incubate these technology companies here in Scottsdale.”
Mr. Lewis agrees burgeoning tech companies are taking the Valley of the Sun — in particular Scottsdale — seriously when considering HQ sites.
“Premier technology incubators such as the SkySong Innovation Center in Scottsdale and the Phoenix Bioscience Core at Wexford Science & Technology in downtown Phoenix are crucial to the foundation of the tech industry in the Valley,” he said.
Global demand, Phoenix jobs
Cushman & Wakefield officials report after a dip in the middle of 2020, demand for tech talent has been on the rise. Globally, job postings for technology occupations has increased over 50% in the first year of the pandemic. In the 10 largest global economies, there are now 2.7 million more tech workers than at the start of the pandemic.
Cushman & Wakefield selected more than 115 different tech cities across the world to evaluate the talent availability and cost, office real estate and business environments. The top tech hubs in each global region are identified by aggregating 14 factors, weighing each according to perceived importance for market selection criteria, and then validating through industry experts and rigorous model testing.
“Property owners and tenants are continuing to determine how occupiers of office space will be returning to the market either in full or moving to a hybrid model,” said Jeff Cooledge of Cushman & Wakefield’s research division. “Office property owners must move quickly to determine the highest and best use for under-utilized space — whether that be upmarket pure office renovation, or a transition to multifamily or industrial uses.”
For North America, the San Francisco Bay Area ranked as the top tech city, followed by Toronto, New York, Seattle, Los Angeles, Atlanta, Washington, D.C., Dallas-Fort Worth, Boston and Montreal, in that order.
Talent remains a critical resource through which tech occupiers evaluate potential locations. The San Francisco Bay Area leads North America with approximately 280,000 tech jobs, followed by New York with 259,000 jobs and Washington, D.C. with 216,000 jobs.
“Office occupiers are looking to enhanced amenities and modern spaces to help build company culture and attract employees back to the office,” Mr. Cooledge said of analysis provided by the report.
“This is often referred to as the flight to quality in which companies seek to provide a best-in-class experience to encourage employees to return to the office. Owners need to be in step with occupiers to help determine how buildings need to be positioned to attract tenants along with understanding today’s construction costs to determine if the repositioning of a building makes sense in today’s environment. Additionally, the Phoenix metro area benefits from a steady stream of new residents, many of whom demand office or coworking space.”
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