29 September 2018

So Much For Tech Cities: Anyone See Phoenix-Mesa On This New List?

Sorry to suck-out all the hot air in the way-too-much-overblown hype and hoopla here in our home city Mesa, but Mesa has Big League Dreams with little to show for it except the $100-Million thrown at the International Design Award-Winning Mesa Performing & Visual Arts Center back in 2005 that's still chugging along to deliver on its promise to become the engine for economic development downtown after thirteen years. Valley Metro Light Rail - 'The Salvation Train'?
That's not delivering on that promise either after four years.
We've also been wondering - What's Next? -  if it's sooner or later to see some positive real results on-track for some point-in-time to deliver salvation-of-any-kind in the distressed neglected downtown area now classified as an Opportunity Zone [ Ozone ] from Mayor John Giles' election platform he named Next Mesa.
Is there something in the water here when Mesa tries to mimic most everything from Salt Lake City or Provo, Utah?
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Why not try Tech downtown?
Fixing-up all the fake facades on ten historic  one-story crumbling soft-brick buildings is a good idea since they've been neglected for decades - there's thousands of square-feet of interior spaces with easy sidewalk-access that can be filled with jobs for people if small tech start-ups can be given move-in incentives after the buildings are re-novated. It's far more cost-effective to push for Re/Generating downtown in available under-used spaces than spending millions in high tech corridors in suburbia.
 
It's faster and cheaper on a small and incremental scale with almost immediate occupancy and results. Tech corridors in suburbia are great for industries that need a lot of logistics. 
Let's take a look at a CWRE report from two days ago:  
Cushman & Wakefield’s ‘Tech Cities 2.0’ report profiles 25 North American cities stamping their ground in Tech 

Tech Cities 2.0 highlights the tech industry’s critical impact on commercial real estate
San Francisco, Ca. – Cushman & Wakefield today released Tech Cities 2.0 an annual report that identifies existing and emerging tech centers increasingly driving the North American economy and details their impact on the commercial real estate sector.
A follow-up from last year’s inaugural Tech Cities 1.0 report, this year’s research reviewed all major North American markets, and groups the top cities into three categories based on how important the tech sector is to the local economy and real estate market:
> 'tech is a critical component’ 
> 'tech is a key driver’
> ‘tech is important’.
As tech companies continue to dominate headlines and grow, a key question is how this affects commercial real estate. Building upon our inaugural Tech Cities report from last year, Tech Cities 2.0 offers new data and a further in-depth analysis of the marketplace,Revathi Greenwood, Cushman & Wakefield’s Americas Head of Research, said.
“Tech is no longer limited to just traditional technology companies – media companies, retailers and even law firms are competing for the same spaces and talent as traditional tech companies
"Although we expect established markets like Silicon Valley to see continued investment, new tech hubs are emerging across North America, from Provo to Philadelphia, sustaining a period of tech-driven, economic growth unseen since the dot-com boom of the late 1990s.”
McCarthy said New York City had seen significant growth in the TAMI sector (Technology, Advertising, Media and Information). “If Silicon Valley is the brains of the tech sector, then New York City is the creative center . . .
Both start-ups and big tech companies have recognized they need a footprint in the central cities to keep attracting millennial workers, and as a result, they are taking large chunks of high-rise buildings and trophy assets in dense urban areas - in addition to keeping their sprawling campuses in the suburbs,” Sammons said.
As well, he added that tech companies are driving demand as they continue to hunt for space and grabbing it in certain hot markets when they can find it.
With unemployment at 4.0% or lower in each of these markets, tech companies of all sizes are in a war for talent and must do their utmost to hold on to and recruit employees – and that means the best salaries, the best incentives, the best space and the best location.
That last point has generally meant an urban or even suburban location that is mixed-use, walkable, bikeable and near mass transit,” he said.
“The trend for the start-ups and tech companies to occupy large spaces in metropolitan areas is occurring all over North America and especially in the cities our report identifies as ‘Tech is a critical component of the local economy and CRE market,’” Sammons said.
Combining employment, occupations, venture capital investment, and demographics statistics, this year’s list from Tech Cities 2.0 is separated into three major categories:
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Where does Mesa miss out?
You simply cannot try to MIMIC Provo and Salt Lake City . . .
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  • Tech is a critical component of the local economy and CRE market:
    • Austin
    • Boston
    • Provo
    • Raleigh/Durham
    • Salt Lake City
    • San Diego
    • San Francisco
    • Silicon Valley
    • Seattle
    • Washington, DC Metro
  • Tech is a key driver of the local economy and CRE market:
    • Atlanta
    • Dallas/Fort Worth
    • Denver
    • Minneapolis/St. Paul
    • Montreal
    • Portland, OR
    • Toronto
    • Vancouver
  • Tech is important to the local economy and CRE market, but there are other important sectors as well:
    • Baltimore
    • Charlotte
    • Chicago
    • Greater Los Angeles
    • South Florida
    • New York City
    • Philadelphia
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Key findings from Tech Cities 2.0 include:

  • In the first of half of last year, 42% of the square footage in the top 100 leases in North America were signed by tech companies.
  • The fastest growing tech employment market since 2010 is Provo, Utah. Though a smaller market than the others on the list, the number of people employed by tech companies increased 64.9%, surpassing the 62.7% increase in San Francisco.
  • Average asking rents in cities like Atlanta, Austin, Seattle, and San Francisco have increased more than 50% since 2010.
  • Property prices are skyrocketing. Among the Top 25, property prices have increased on average by 59%, with the greatest increases happening in Austin, Silicon Valley, and San Francisco.
  • Cities that are targets for venture capital funding are the most important tech cities in North America. Among the Top 25, VC funding grew by an average of $2.0 billion compared to $457 million for the top 101 markets.
  • The top four cities for new construction are all cities where tech is a critical factor in the local real estate market, including: Austin, Raleigh/Durham, Seattle, and San Francisco.

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