There are many reasons tech companies are choosing Phoenix as their home: a more affordable quality of life for employees, a strong and growing talent pool, and—most significantly—a lower cost of doing business including lower real estate costs.
According to JLL’s U.S. Technology Outlook, office rent in Phoenix’s most expensive tech submarket (Tempe) is 71 percent cheaper than Silicon Valley’s most expensive tech submarket (Menlo Park) and is 34 percent cheaper than Seattle-Bellevue’s Lake Union submarket. But that’s not the only savings companies may experience.
Looking at a case study of a 30,000 square foot lease with a 10-year term, these rent savings result in an up to 62 percent savings in annual employee costs for companies locating from Silicon Valley and a 40 percent savings in annual employee costs for companies locating from Seattle-Bellevue. Here is the breakdown:
With savings like these, plus all the other positive Phoenix attributes previously mentioned, it’s no wonder why tech companies like Gainsight, Paypal, Shutterfly, Weebly, Yelp, Uber and Silicon Valley Bank have chosen to migrate from Silicon Valley to Phoenix.
Click here to learn more about the Phoenix technology real estate market.
About the author
Kiana Cox is a senior research analyst in the JLL Phoenix office who works closely with brokerage and support professionals throughout the western region, as well as colleagues throughout the global JLL organization, to provide best-in-class research that differentiates JLL.