Phoenix is one of a handful of cities that hope to capture businesses that leave the Bay Area. Nearby universities provide a pool of talented workers who can enjoy the same standard of living as those in San Jose for significantly less money.
This makes Phoenix an attractive option for tech companies looking to cut costs while retaining key talent. Phoenix has been courting this sector of the economy for a long time – at one point offering the city as a test market for Amazon’s drone delivery program – and its efforts are beginning to bear fruit. Office rentals grew throughout the pandemic, with big-name tech companies as some of the largest investors.
The construction volume of Phoenix should remain steady through the early part of the decade, although it looks like 2021 was the market’s high-water mark. Construction spending in the next few years should average around 20% higher than before the pandemic and our team expects the overall costs to decline as the problems in commodities markets are ironed out.