JLL report finds Phoenix’s tech industry poised to add thousands of jobs in coming years
The Phoenix metro is set for a big spike in technology jobs in the coming years.
A report from brokerage firm JLL found that Phoenix, which already boasts a healthy advanced manufacturing and back-office ecosystem, will be a big beneficiary of the federal CHIPS Act funding that projects to spur greater investment throughout the country. By 2028, JLL projects Phoenix to add more than 7,000 tech jobs to its workforce of more than 64,000. A tech worker on average earns $140,676 annually.
With expansions ramping up at major chip factories like Taiwanese Semiconductor Manufacturing Co. and Intel Corp., jobs are in high demand. TSMC and Intel are set to receive billions of dollars in federal CHIPS Act funding to build out their fabs. The two companies expect to create a combined total of more than 9,000 manufacturing jobs. That, coupled with investments from other recipients of the CHIPS Act funding, could create a ripple effect for future tech jobs in the Valley.
“Ten years from now, I think we’re going to be looking back like Silicon Valley did in early days when they were funding the LinkedIns, the Salesforces and the Facebooks and then the ripple effect that those companies had,” said Ryan Bartos, senior managing director at JLL. “You’re also going to have people who are part of these companies that leave and start other companies. I think that has started here, but it’s not near the pace that you get in what I call a tier one tech market like a San Francisco.”
Venture capital funding will play a big role in the launch of those startups. The number of venture capital deals for U.S. companies in the first quarter fell to the lowest level since 2017, according to a report from the Business Journals that looked at venture capital data from PitchBook.
In Phoenix, JLL found that venture capital firms pumped $339 million in funding, led by SaaS Ventures and TMT, which were responsible for $152 million and $130 million from Q2 2023 to Q1 2024, respectively. Compared to 18 other markets profiled in JLL’s report, the $339 million in venture capital funding ranked second-to-last, ahead of Portland, which drew $206 million during that time. In San Francisco, there was $19.3 billion of tech venture capital funding, topping the list of markets researched.
Target areas for leasing have changed over the past few years
Companies in information technology, aerospace, defense, health care and fintech were among the top investments in the first quarter across the state.
Through May 29, JLL found that the tech industry accounted for 18.4% of all leasing activity since the start of the year. That ranks third behind professional and business services and finance, which represents 21.3% and 34.4% of leasing, respectively. The target areas for leasing have changed over the past few years. Bartos said tech companies are targeting the best available buildings that cater to their workforce rather than just wanting to be in Old Town Scottsdale or along Tempe Town Lake.
“I think it all depends on the company, the jobs and the environment they want. A semiconductor supplier that has high paying jobs, [employing workers in their] mid-30s to mid-40s with families … I think you will definitely see that start to [lease] in the North Valley,” Bartos said. The true like, VC-backed startup, AI company that hires a little bit younger, I still think you’re going to see a draw to downtown Tempe, Old Town [Scottsdale], Phoenix and the Camelback [Corridor].”
Last year, Bartos, along with fellow JLL colleagues Jami Savage-Gray and Kyle Seeger put together a big lease for Chandler-based Offerpad, which operates a tech-enabled platform for residential real estate. Offerpad signed a lease in late 2023 to relocate to The Beam on Farmer — a newly built office building in Tempe.