Phoenix ranks #17 on CBRE’s Tech Talent Scorecard, part of its fifth annual Scoring Tech Talent Report, which ranks 50 U.S. and Canadian markets according to their ability to attract and grow tech talent.
The report, which can be viewed in detail by market in the interactive Tech Talent Analyzer, finds that strong demand for talent that offer specific skills, such as software development, coupled with a tight labor supply, is driving companies to locate in markets with the largest concentrations of high quality talent. And while value is a key driver when it comes to choosing an office location, companies are showing that they are willing to pay a premium to access the highest quality tech talent.
“Since the cost of talent is the largest expense for most firms, the quality of that tech talent is becoming one of their most important considerations. The skills of the available labor pool do not appear to align with available jobs, causing a structural impediment to growth for companies across North America,” said Colin Yasukochi, director of research and analysis for CBRE and the report’s author.
The rankings for the Tech Talent Scorecard are determined based on 13 unique metrics including tech talent supply, growth, concentration, cost, completed tech degrees, industry outlook for job growth, and market outlook for both office and apartment rent cost growth.
Helping to elevate its ranking on the Scorecard, Phoenix stood out in the report in a number of key areas:
- Phoenix has the 13th largest tech talent labor pool among large markets, with 83,140 people employed in tech jobs.
- The Phoenix metro area was the eighth-ranked metro area for tech degree completions from 2014 to 2015 (4,744).
- Phoenix ranked #9 (by percent change) for tech employment growth. With a growth rate of 33.5 percent from 2011 to 2016, Phoenix came out ahead of more established markets like Seattle at 33.4 percent, New York at 32.9 percent, Austin at 28.3 percent and Los Angeles at 19 percent over the same period.
- The Phoenix millennial population increased 7.7 percent. In this category, Phoenix outperformed a handful of large top tech markets including Dallas (3.8 percent), New York (2.6 percent), Boston (0.8 percent) and Chicago (-1.4 percent) all of which fall below the U.S. average of 4.6 percent.
- Phoenix was the 23rd most affordable large tech market with an estimated total cost of $38.96 million. This compares to estimated total costs in markets like San Francisco, Los Angeles, Seattle and Austin of $57.4 million, $44.4 million, $49.3 million and $43.7 million, respectively. This is based on CBRE’s analysis of estimated one-year costs in terms of wage and rent obligation for a sample tech firm with 500 employees and 75,000 square feet of office space.
- Phoenix has a wage to apartment rent ratio of just 13.3 percent, making it the 11th most affordable tech talent market. Tech-workers in New York, Los Angeles and San Francisco are spending between 27.2 percent and 30.8 percent of their wages on rent.
- Phoenix office rents increased 19.9 percent to $24.85 and its vacancy rate decreased 8.8 percentage points to 17.3 percent from Q1 2012 to Q1 2017.
“In addition to Phoenix’s deep skilled labor pool and relatively affordable operational environment, we’re also seeing strong tech employment growth, which is a good signal to employers that Phoenix has the momentum to meet their long term employment needs,” said Kevin Calihan, executive vice president with CBRE’s Phoenix office. “More millennials are coming to realize Phoenix is an affordable place to live, offering them a higher quality of life than some other larger markets. The high cost of living in other large markets is becoming cost prohibitive.”