Ambassador Event: Site Selection Panel

How the movement of workforce talent has led to more tech and life science clustering

The WM Phoenix Open gathered hundreds of thousands of people in Scottsdale to enjoy Arizona’s ideal February weather and watch some of the best golfers in the world compete over a weeklong tournament.

It’s fitting that this took place in one of the fastest growth markets in the country, where more and more clusters of residents and entrepreneurs are creating new channels for lifestyle and business growth.

A group of national site selectors joined the Greater Phoenix Economic Council (GPEC) for an Ambassador Event with a discussion on economic development trends and best practices. The panel consisted of:

• Gianna Attardi, Manager, Atlas Insight
• Catherine Broadnax, Associate Partner, Urbanite Advisors
• Doug Dalton, Managing Director, BT Strategies
• Matt Szuhaj, Vice President, Strategic Development Group
• Thomas Maynard, Senior Vice President of Business Development, GPEC (Moderator)

“One of the things I love about the relationships with our regional airport system is that it’s not competitive,” Mackay said. “It is truly working together to ensure that the region has great air service.”

How migration trends have influenced new clustering

When remote work became a more prominent standard during and following the COVID-19 pandemic, people began prioritizing quality of life when relocating, versus solely moving based on a place of work. Greater Phoenix was one of the greatest beneficiaries of this migration pattern, as about 300,000 people moved to the region between 2020-24, according to the U.S. Census Bureau.

From this, a new precedent was established. Companies began expanding to these growing employment corridors, following the talent, rather than moving to previously established hubs under the assumption that the workforce would follow.

As such, new markets flourished.

“We saw that you can have a successful tech operation, for instance, in a city that isn’t a traditional hub,” Broadnax said.

Greater Phoenix has developed as an alternative destination for tech companies that would historically feel the necessity to be in Silicon Valley. Not far from TPC Scottsdale, where the WM Phoenix Open took place, GPEC hosted Desert Tech Connect in partnership with Crossover VC and Saints Capital, with more than 130 entrepreneurs and investors having conversations and listening to fireside chats about leveraging regional opportunities.

The outlook of the region’s tech sphere has grown alongside the emergence of the semiconductor supply chain. With top-of-the-line chips produced by TSMC Arizona and Intel, and dozens of suppliers expanding over the last five years, no market in the country is seeing faster and stronger growth in advanced manufacturing. This has contributed to the rise in Greater Phoenix’s life sciences ecosystem, which is seeing additional clustering opportunities.

Greater Phoenix has long been a popular healthcare destination, backed by the presence of national leaders like Mayo Clinic and Banner Health, but the medtech and bioscience industries are growing extremely fast. The region saw more employment growth in bioscience and healthcare over the last 10 years than any other metro in the United States.

In addition to new manufacturing capabilities, this has been driven by clusters like the 30-acre Phoenix Bioscience Core, which has dozens of companies and organizations operating in close proximity, Park Central, which houses Creighton University, and the Mayo Clinic campus in north Phoenix, home of a $1.9 billion expansion and the Arizona State University Health Futures Center.

“Mature life science clusters are also mature tech clusters … One thing that’s nice about this area is you’re playing multiple parts of the value chain,” Szuhaj said, listing research, development, drug substance, drug product, distribution and customer service. “You can do a lot of it here, and that’s one of the strengths of this area.”

As Greater Phoenix makes strides to catch up to the historic life science leaders like San Diego and Boston, it is gaining a better reputation for companies around the world. European companies like MiiHealth and Hummingbird Biomedical have recently entered the market, creating a partnership with Mayo and launching a landing lab, respectively.

“Something I’ve seen which is really interesting is this desire to create these micro-clusters of industry. It can be as small as a coworking space that is oriented around life sciences or tech,” Broadnax said. These function as working and networking spaces, giving remote workers spaces to connect, and they “almost act like social clubs,” she added.

Other factors in site selection

The site selection process has evolved significantly in recent years. It has become more nuanced, with companies looking at power and workforce needs with greater consideration than in the past.

“(Five years ago), power was not as big a concern,” Attardi said. “Now, when we start the site selection project, it’s one of the first things [we bring up]. It’s a pass-or-fail kind of thing.”

Arizona Public Service and Salt River Project are the two major utility providers in Greater Phoenix, and both are integral in the process as there have been newer needs for modern technologies in semiconductors, artificial intelligence, quantum computing and more.

On the workforce side, there’s a greater emphasis on companies internally developing talent pools to meet the demands of growing industries. Broadnax advised communities to adjust their practices in building workforce development initiatives, as the discussions are frequently tailored toward the brainstorming process of what companies want and how to meet those needs, and then “somehow deliver the talent to them.”

“You get a lot more bang for your buck, in my experience, internally on the company side, in supporting the initiatives that companies are already doing to upskill their own talent,” she said.

This could include offering training space, a lunch series, evening after-work series, certificate programs, or soft skills trainings, among other creative avenues.

Despite the increasing emphasis on workforce development and utilities, there is still curiosity and desire around economic development programs. Greater Phoenix has very strong Foreign Trade Zone and Military Reuse Zone programs, as well as the Quality Facilities Tax Credit and HB2822, which reduces personal property tax for a variety of business, manufacturing and agriculture industries.

Dalton said companies will sometimes review incentives or tax credits and “miss the big picture” that may include real personal property investment being more or learning about the differences between tax increment financing and tax abatement.

“Every local community’s different. Every state’s different. There’s a lot of math that goes into it,” Dalton said.

When it comes to working with site selection consultants, it is important to be honest and transparent to build trust without overselling the community’s assets.

“We really appreciate the transparency,” Attardi said. “When we trust the economic development professionals, the more like we are to advocate for wherever you are.”