Here’s why Phoenix is a great place to build a tech company

Business News | 23 Apr |

Those who are familiar with technology and business know that, when it comes to companies choosing certain locations in certain areas, there’s what’s known as a “market curve.” 

The first level of the curve, the companies that build first, are often call centers, then finance centers, and finally, once the city is sufficiently advanced, centers for the actual development of tech. 

So, where does greater Phoenix fit on this curve? 

“The Phoenix metro has a pretty good story to tell,” says Thomas Maynard, vice-president of business development with the Greater Phoenix Economic Council. 

It’s undoubtable that Greater Phoenix has many attractive points, all that serve to make the area competitive as one of many potential markets for various tech companies. If one were to pick the three highest draws that technology companies appreciate the most, it would be these: the high concentration of talent that the area possesses, the business-friendly environment, and the area’s overall affordability. 

Talent 

“The most important driver that tech companies are looking at right now is talent,” says Kristen Sexton, senior managing director of CBRE labor analytics. “Where are the people, and especially the quality of the talent that they’re looking for and the skills that they need. That really hasn’t changed much over time.” 

The Greater Phoenix area has no shortage of needful talent: according to the Phoenix Tech Story, published by the Greater Phoenix Economic Council and CBRE, the number of tech workers in the area as a percentage of its overall population has increased an average of 28.2% over the last ten years, a higher rate of growth than in markets like San Francisco and New York. 

To see from where this influx of tech workers originates, one need look no farther than the area’s universities. Arizona State University, for example, has the country’s largest engineering school with 20,000 students currently enrolled. ASU has been ranked as Most Innovative School in the Nation by the U.S News and World Report for the 3rd straight year. 

Since 2010, over 68% of ASU graduates stay in the Greater Phoenix region, increasing the pool of talent for incoming tech companies to explore. 

As Brad Jannenga, CEO of SaaS Industries, states, “The talent pool in Phoenix is as robust as anywhere in the country.” 

Business-friendly environment 

“Arizona is a wonderful state, ripe with talented people and a favorable business environment,” says Pat Hurley, vice-president of sales for Acronis. “We are excited for the future.”

When one looks closely at what creates this pro-business environment that helps Greater Phoenix to thrive, one finds several examples. One of the most notable is the pioneering path that Arizona has taken with respect to self-driving cars. 

Executive Order 2015-09, which was signed in 2015 by Governor Ducey, allows autonomous vehicles to be tested in Arizona, and encourages state agencies to support their development and set safety parameters in which such testing can be carried out. 

Ever since then, companies like Uber, Waymo, and Local Motors have flocked to the Greater Phoenix area, eager to implement and strengthen their autonomous vehicle technology on such favorable ground. 

Diana Vowels, general manager of Galvanize, agrees with this sentiment: “When Galvanize looked at what markets to expand to, we looked at a lot of factors, but what really differentiated Phoenix was the cooperation that we see between government and the private sector.” 

She goes on to compare the process of building new campuses in New York and in Phoenix, roughly begun at about the same time. 

While the Phoenix campus is already up and running, with 120 companies working out of its location, the New York campus is still unfinished.  

“When I talk to my New York counterpart, I’m glad that I’m in Phoenix,” she remarks. As one of many companies that takes advantage of Arizona’s business-friendly climate, she’s not the only one. 

Affordability  

When discussing the many characteristics that make Phoenix an affordable place to start up or to scale a company, one should include the wide availability of affordable real estate. 

Kevin Calihan, executive vice-president of CBRE Advisory & Transaction services, elaborates on this phenomenon. 

“One of the lucky things we have about Phoenix is an abundance of real estate,” he says. Speaking on downtown Tempe, where he says that “we have a big pipeline of developmental deals”, he states that “We still have yet to see a major occupier who couldn’t find a spot.” 

When discussing the locations where most tech companies prefer to build, he says that it’s usually aligned along the 101 and 202 freeway corridor. 

“Since there’s space there, they haven’t been forced out into outlying areas,” he concludes.  

And real estate isn’t the only sign of Phoenix’s affordability. Phoenix’s cost-of-living index, which examines price levels for consumer goods and services,  is 95% of the national average, while Seattle’s is 149% and San Francisco’s is 198.9%. 

This translates into less expenses for both consumers and potential workers, and thus less labor costs when it comes to salaries. 

As Anthony Kaennada, CMO of Gainsight, states: “The value proposition of starting and scaling a business in Phoenix is clear and has the attention of our friends in Silicon Valley, who are investing their dollars and creating jobs in our community.” 

Conclusion 

From all that metro Phoenix possesses, it’s clear that the area is a good place to build a business. As time goes on, more and more companies, including tech, are sure to take advantage of these benefits. 

“We’re trying to identify what we’re going to be in the future,” says Maynard, referencing the area. “What we’re looking at is: what are those industries and markets of the future, what are the strengths that our region has currently, and where do those two line up.”  

Whether those strengths are the region’s growing pool of talent, its business-friendly regulatory environment, or its multifaceted affordability, they all serve to make metro Phoenix a one-of-a-kind place to be.  

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