Weather, technology & affordability key to continued interest
August 19, 2020
It used to be the “Five Cs.”
During Arizona’s first years of statehood, the region’s natural complements of copper, cattle, cotton, citrus and climate were considered driving forces that brought tourists, industry and new residents to the area.
By 2020, though, the primary draws have changed significantly, attracting a 21st Century influx of transplants — each in pursuit of their own perception of the pursuit of happiness.
What’s the Appeal?
According to Connie Weber, director of public relations at the Arizona Commerce Authority, “Arizona offers a unique value proposition that resonates both with business decision-makers seeking locations for growth, and people moving into the state searching for new opportunities.”
While Arizona is home to one of the top five largest metropolitan areas in the United States, which is Phoenix. Ms. Weber points out the state’s operating costs are significantly lower than other major market. Arizona has one of the lowest corporate tax rates in the country at 4.9%; she observes, and offers low office-lease rates, in sharp contrast to other metropolitans like New York City, San Francisco and Los Angeles.
“Insurance costs for worker’s compensation and unemployment insurance are lower in Arizona than in California and New York,” she explained. “Median wages of positions in the tech industry are lower in Arizona compared to California and New York. Additionally, talent acquisition costs are more manageable as Arizona provides a large pool of skilled talent to meet the needs of employers, lowering the intensity of competition.”
Ms. Weber also points to Arizona’s quality of life as another key draw for homeowners and young people.
“Individual taxes are lower — property taxes are on average less than two percent of the cost of a home,” she said. “Residential real estate is affordable and offers a range of options from downtown urban living to room to grow a family in the suburbs to beautiful rural communities across the state. Modern infrastructure means easier commutes, so residents spend less time sitting in traffic and more time.”
The Good, the bad and the heat
While he acknowledges a few drawbacks (hot summers, limited housing, a salaried pay scale lower than some big cities), Greg Hague, founder of Hague Realty, recognizes the increasing appeal of the area, including less traffic, vacation-like amenities and a “golfing paradise.”
“I’ve lived here since 1981, when the Phoenix metro area was truly a southwestern desert community that offered a unique lifestyle complemented by warm weather winters,” he recalled of his early years in the Valley of the Sun.
“Over the years, the area has matured into a magnet for jobs and business opportunities across multiple spectrums, including robust high-tech job opportunities. This has made Maricopa County one of the (if not the) most desirable places to live in the U.S. because we now offer the trifecta of income/business opportunity, desirable weather, and affordable living.”
Frank Aazami, principal of private client group at Russ Lyon Sotheby’s International Realty, echoes a similar balance of the good and ostensibly bad, adding to the former outdoor activities, scenic views, easy travel opportunities and gated and secured communities.
There has, however, been a shifting perception of the Valley, according to Mr. Aazami.
“We are now offering the most amount of new never-lived-in apartment units with first-class amenities,” he said. “Light Rail properties have increased tenfold. Huge developments coming in on the west side of the Valley of the Sun.”
— Frank Aazami
He also says that world travelers and those with second or third homes have “finally realized through the test of time, that it’s truly logical to become a transplant and choose Arizona as their primary residence.”
Debbie Johnson, director of the Arizona Office of Tourism, reports that Arizona set, all-time visitation, visitor spending and tourism job records each year for the past four years in a row.
“We know that 2020 won’t reach these record levels because of the COVID-19 pandemic’s devastating impact on travel,” she warned. “But this data shows us that people from across the country and across the world keep Arizona close to their hearts and look forward to spending their leisure time and money here, which boosts the quality of life for residents in communities across the state.”
Ms. Weber likewise alludes to positive recent data, submitting that in 2019, more than 120,000 people moved to Arizona, placing the state in the top three for population growth, according to the U.S. Census Bureau. Maricopa County also leads the nation in adding new residents, outpacing the other 3,141 counties in the United States.
From 2010 to July 1, 2019, Phoenix added more residents — 234,201 — than any other city in the country. Arizona is also ranked number one for inbound migration by the American Enterprise Institute, she points out, which is based on measures of economic performance, business climate, business and individual taxes, fiscal health, electricity and housing costs and labor market dynamism.
“This rapid population growth emphasizes the opportunities — both personal and professional — that are available to residents in Arizona,” she said.
While about 70% of Arizona’s adult population was born somewhere else, Ms. Weber notes they still choose to make the state their home.
“The state’s affordable cost of living and high quality of life is appealing to those tired of the high housing and tax costs found in other major markets,” she explained. “National media outlets have reported that many people are leaving cities like New York, Los Angeles, Chicago, Washington, D.C., and San Francisco in large numbers due to untenable costs, and many are choosing to relocate to Arizona.”
— Connie Weber
According to Ms. Weber, the Council of Community & Economic Research’s Cost of Living Index (Q3, 2018) shows that in Phoenix, the costs of housing, grocery items, health care, and other goods and services are all lower than the national average.
A widespread exodus on the horizon?
Aside from the major metropolitan centers cited by Ms. Weber, Mr. Hague notes that Seattle is another spot transplants commonly arrive from, while Mr. Aazami adds to the list cities like Denver and states such as Utah and Montana; basically, wherever it’s cold.
Although the Arizona Office of Tourism doesn’t have data on those who choose to become full-time Arizona residents, Ms. Johnson says they do target specific locations in their multi-channel tourism marketing campaigns.
“For instance,” she postulates, “in our most recent nationwide domestic marketing campaign, we also targeted specific potential visitors in Chicago, New York, San Francisco, Minneapolis and Dallas. So, I would imagine that since people in those areas have greater exposure to everything that makes our state amazing, that they’d be more likely to make Arizona their permanent home too.”
While the Coronavirus pandemic has taken a toll on multiple aspects of American lives, Mr. Hague says that since March, there has been a noticeable increase in out-of-state home buyers, and people inquiring about moving to Arizona.
“Even though Arizona has recently had a resurgence in COVID,” he said. “We are still seeing an exodus to Arizona of people from New York, California and other dense urban areas because of the perception that Arizona is not as congested, has a relatively low cost of living and offers open space outdoor opportunities.”
Business is booming
Corporate interest has also been a crucial factor in finalizing diverse relocation.
“Companies worldwide have taken note that Arizona is an ideal place to develop and apply new technological advances,” Ms. Weber said. “And, job seekers increasingly view Arizona as a state offering plentiful career opportunities that they would also enjoy living in.”
Ms. Weber comments that Arizona’s geographic location is also highly advantageous, pointing to access to markets such as Mexico, Texas and California.
“We have become a particularly attractive location for companies seeking access to customers in California,” she notes, “without the burdens of actually operating within that state.”
Ms. Weber says in recent years, Arizona has been nationally recognized for growth in the technology sector and has a reputation as the best place to launch, test and scale new ideas.
“Under Governor Ducey’s leadership,” she said, “Arizona has become a hotbed of innovation by encouraging new technologies including 5G, fintech, proptech, home-sharing, ridesharing, and automated vehicles.”
Phoenix was featured as one of the top markets for tech jobs in CBRE’s 2019 Tech Talent report, Ms. Weber adds, and Tucson was named the number one up-and-coming tech market, with 90 percent growth in tech jobs and average wages of $90,523, also by CBRE in 2019. In addition, nine Arizona firms made the Inc. 500 2019 list of the fastest-growing companies in America.
In addition to technology, aerospace and defense, manufacturing and business and financial services are also highly visible industries in Arizona.
“Bioscience and health care are also quickly emerging as a high-growth sector in Arizona,” said Ms. Weber. “Tourism is an important contributor to our state’s economy, as Arizona is an internationally-recognized travel destination.”
Arizona’s tech sector is growing at a rate 40 percent faster than the rest of the country, according to Ms. Weber, citing a 2019 AZ Tech Council report.
Tourism drives relocation
Tourism has been a key aspect in establishing Arizona as an ultimate destination for permanent residence, and as Ms. Johnson opines, “It’s a very easy jump to think that because our hospitality industry consistently delivers wonderful experiences to our guests, that those visitors are more likely to move here if they have the chance.”
“When you consider that Arizona has been among the national leaders in other important areas such as job creation, quality of life and cost of living,” she remarks, “I think Arizona makes a pretty compelling case as a place to take a vacation and build a life.”
According to Ms. Weber, Arizona’s climate and geography provide a year-round outdoor lifestyle, with four seasons and activities from hiking to boating to skiing and snowboarding.
“Those who haven’t visited Arizona may mistakenly believe the state is mostly hot, dry desert,” she observes. “In fact, Arizona has a diverse climate that offers all four seasons and is a wonderful playground for outdoor enthusiasts. In addition to its ski areas, canyons, lakes and rivers, the state is home to 22 national parks and monuments, more than 400 golf courses. Arizona boasts more than 300 days of sunshine per year and experiences virtually no natural disasters.”
Ms. Johnson likewise praises Arizona’s eclectic geography, from wide-open desert regions to snow-capped mountains with thick pine forests, as well as a concentration of four- and five-star resorts and a variety of recreation and camping options.
“And considering that Arizona’s No. 1 tourist group is Arizonans – who accounted for an all-time record 11.2 million overnight visits last year – we know that there’s always something new to discover or rediscover,” she states.