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March 2024 Phoenix Market Updates blog post cover image

March 2024 Market Update: Phoenix Poised for Accelerated Growth

Phoenix’s market has always been dynamic, but recent developments signal a surge in economic activity that presents exciting opportunities for real estate investors. From major manufacturing investments to impressive population growth, the Phoenix MSA is poised to become an even more attractive location for businesses and residents alike. 

Employment Growth: Big Names Setting Up Shop 

Several major corporations are making significant investments in Phoenix, promising a boost to the job market and an influx of new residents. One exciting development is the arrival of Fender Musical Instruments. The music company is building a new corporate office in Phoenix. The 80,000-square-foot building, located at the redeveloped site of the former Paradise Valley mall, will offer a dynamic workspace for the iconic guitar brand. This expansion is expected to create new jobs, with Fender currently employing 200 people in the area and planning to add 100 new positions within five years of the move (Phoenix Business Journal).  

Phoenix sunset

Fender’s decision highlights the growth and attractiveness of the Phoenix area. The company cited the region’s talent pool and the vibrant mixed-use environment of the PV development as significant factors in its decision to relocate. 

Federal CHIPS Act Investing in Arizona 

The federal CHIPS Act is playing a pivotal role in transforming Arizona into a major semiconductor hub. The act provides financial incentives, including grants, loans, and tax credits, to companies investing in domestic chip manufacturing. This support is attracting significant investments from industry leaders, strengthening Arizona’s position in the semiconductor landscape. 

Major players like Intel and TSMC are at the forefront of this expansion. Intel has received a multibillion-dollar package through the CHIPS Act to modernize and construct new fabs in Arizona. This investment will create thousands of jobs and support the development of Intel’s advanced technologies. TSMC, the world’s leading chipmaker, is also set to receive significant federal grant funding for its Arizona facilities. The influx of resources enables these companies to expand their manufacturing capabilities significantly within the state. 

The CHIPS Act is not only attracting large corporations but also supporting the overall growth of Arizona’s semiconductor ecosystem. Companies like Amkor Technology are investing in advanced packaging and testing facilities, further diversifying the industry’s presence. Additionally, the CHIPS Act includes funding specifically earmarked for workforce development in the semiconductor sector, ensuring Arizona has the skilled labor force to support this rapidly growing industry (Phoenix Business Journal). 

The impact of the CHIPS Act on Arizona’s semiconductor industry extends beyond direct investments. It creates a favorable environment for innovation and growth, solidifying the state’s reputation as a desirable location for semiconductor companies. This, in turn, is likely to attract further investments and bolster Arizona’s position as a vital center for semiconductor manufacturing. 

Semiconductor Support in Arizona 

Pentagon Technologies Group, a critical materials supplier to semiconductor foundries, is constructing a new, state-of-the-art cleaning facility in Mesa, Arizona. The $50 million investment will create up to 300 new jobs and is scheduled to be operational by Q4 of 2024. 

Pentagon specializes in providing contamination control, mission-critical services, and consumables that enhance the efficiency and lifespan of complex manufacturing equipment in the semiconductor and microelectronics industries. Their expansion into Mesa highlights their commitment to supporting the growing semiconductor industry in Arizona. 

The Arizona Commerce Authority, Greater Phoenix Economic Council, and Mesa Mayor John Giles all expressed enthusiasm for Pentagon’s arrival. “We are excited industry leader Pentagon Technologies has chosen Arizona for its innovative semiconductor operations,” said Sandra Watson, President and CEO of the Arizona Commerce Authority. “Pentagon Technologies’ new facility strengthens Arizona’s already robust semiconductor supply chain, which is the fastest growing in the nation. We are grateful to Pentagon Technologies for its investment in Arizona and look forward to supporting the company’s success in Mesa.”  

“Mesa has an important role to play in high-tech manufacturing and the semiconductor supply chain, and as part of that, we’re pleased to welcome Pentagon Technologies’ new facility,” said Mesa’s Mayor John Giles. “This is a substantial capital investment in our community that signifies the creation of hundreds of new jobs and further solidifies Mesa’s position as a hub for innovation and economic growth.” This investment strengthens Arizona’s semiconductor supply chain and further establishes Mesa as a hub for high-tech manufacturing and innovation (AZ Big Media). 

In addition to Pentagon’s new facility, SEALSQ Corp., a Swiss semiconductor company, is establishing a new U.S. headquarters and assembly and test center in Phoenix, Arizona. This move is expected to create up to 300 new jobs. SEALSQ is currently registering its US entity and aims to open the facility by late 2025. While details on investment amounts and specific locations are pending, the company states the facility will be substantial. 

SEALSQ selected Arizona due to the state’s thriving semiconductor industry, presence of major players like Intel and TSMC, strong research and development, and access to a skilled talent pool (Phoenix Business Journal). 

Phoenix City Hall
Population Growth: People are Flocking to Phoenix 

Recent population data from Axios reinforces a major trend: Arizona continues to be one of the hottest destinations for people relocating from across the country. Between 2020 and 2023, the Phoenix metro area added an estimated 195,000 new residents. This represents a 4% population increase, significantly higher than the 1% national average. This surge in population highlights the Valley’s attractiveness and likely reflects its expanding job market (Axios). This trend shows no sign of slowing. 

Thriving Business Environment 

t’s not only the big manufacturers who are driving Phoenix’s growth. The food service and retail industries are also seeing expansions and openings, contributing to the local economy and diversifying job opportunities. Hawaiian Bros, a Kansas City-based restaurant chain offering island-inspired food, is expanding its presence in Arizona. The company recently opened two new brick-and-mortar locations in Glendale and Tucson, marking their first physical restaurants in the state. This expansion is facilitated by a franchise deal with Stine Enterprises, a Phoenix-based company with experience in the restaurant industry. 

Stine Enterprises, well-known for its franchise operations with Jack in the Box and Denny’s, has ambitious plans for Hawaiian Bros in Arizona. They signed a deal to open 75 locations across Arizona and North Texas, with plans to invest significantly in building each site from the ground up. The company aims to create around 2,000 new jobs in Arizona with approximately 40 employees per restaurant. Hawaiian Bros’ impressive growth trajectory, with an average annual revenue growth of 124.3% between 2020 and 2022, makes it a promising addition to Arizona’s dining scene (Phoenix Business Journal).  

Modern Market Eatery, with its focus on health-conscious food is similarly expanding in Phoenix, tapping into a growing population interested in health and wellness. The Colorado-based company aims to make fresh, wholesome meals more readily available in the area. Modern Market Eatery, offering bowls, salads, sandwiches, and brick oven pizzas made from scratch, already has three locations in Phoenix and Scottsdale. Their expansion plans include opening 10 additional restaurants within the next 6-7 years, creating approximately 200-250 new jobs in the Phoenix area (AZ Big Media). 

Economic Outlook: Experts are Optimistic 

Economists are projecting an even stronger Arizona economy through 2024. Multiple factors are driving the state’s success, including a dynamic business climate that attracts major companies and a booming semiconductor industry. This favorable environment fosters growth across key sectors like healthcare, hospitality, trade, technology, and construction. 

Positive trends further solidify Arizona’s strengths: A productive workforce, favorable tax and regulatory environments, and a thriving startup ecosystem continue to attract new businesses. The construction sector is expanding, and wholesale trade is seeing significant job growth. 

Arizona cacti

“Where we are today is the result of decades of intentional planning between local municipalities and partners across the region including ASU,” says Chris Camacho, president and CEO of Greater Phoenix Economic Council. “Greater Phoenix is now entering the next economic frontier where we intend to become home to the next wave of game-changing companies, creating quality jobs and driving the region’s relentlessly innovative spirit.” (ASU News) 

Woman owned business in downtown Phoenix
Phoenix Ranks Top Five for Woman-Owned Businesses 

A recent report by Wells Fargo Bank NA highlights Phoenix’s favorable environment for women-owned businesses. The Phoenix-Mesa-Scottsdale region ranks fifth among major metropolitan areas nationwide in supporting the growth of female-owned companies. The study highlights Phoenix’s diverse economic sectors, including real estate, tourism, and manufacturing, as key to providing opportunities for women entrepreneurs. 

The Wells Fargo report analyzed data from the U.S. Census Bureau, focusing on the growth of women-owned businesses in terms of numbers, employment, and revenue from 2019 to 2023. The Miami-Fort Lauderdale metro area topped the rankings, followed by Dallas-Fort Worth, Boston, and Los Angeles-Long Beach. The report emphasizes that these leading metropolitan areas share a pattern of support structures, incentives, and specialized mentoring programs designed to foster the growth of women-owned businesses (Phoenix Business Journal). 

LG Energy Solutions Planning Battery Manufacturing Facility 

LG Energy Solution (LGES), a leading supplier of batteries for major automakers, has secured financing for its new Arizona battery manufacturing plant. The Phoenix Metro facility, representing a $5.5 billion investment, will include both cylindrical battery and lithium-iron phosphate battery production lines. Once fully operational, it will create 3,700 jobs and position LGES as the largest employer in Queen Creek, Arizona. 

To support the LGES project, the town of Queen Creek previously secured $50 million in debt to fund necessary infrastructure improvements, with reimbursement expected through construction tax revenue. 

Construction on the LGES plant is underway with Yates Construction serving as the general contractor. This project adds to Arizona’s growing reputation as a hub for battery manufacturing, with KORE Power also making significant progress on its Buckeye facility (Phoenix Business Journal). 

Data center Phoenix
Phoenix Ranked Second-Largest Data Center Market in the Nation 

Phoenix has solidified its position as the second-largest data center market in the U.S., following only Northern Virginia. During the second half of 2023, Phoenix saw the completion of leases for 748MW of capacity and currently has 703MW under construction. This growth is attributed to the region’s ample power supply, affordable electricity, and availability of land for development. 

Like other major data center hubs, new leases in Phoenix focus on under-construction or planned facilities. Despite strong demand, Phoenix remains cost-competitive, offering significantly lower rental rates and power costs compared to markets like California and Northern Virginia. These advantages ensure a continued pipeline of new data center developments. 

 The evidence is clear: Phoenix is a powerhouse of economic opportunity. From major manufacturing investments like those by Intel and TSMC to an expanding food and retail scene, the region is experiencing dynamic growth. The influx of new residents drawn by Phoenix’s job market and quality of life further fuels this expansion. 

Bolstered by the support of the CHIPS Act, Arizona’s semiconductor sector is thriving, attracting global players and solidifying the state’s position on the technological forefront. Additionally, initiatives supporting women-owned businesses underscore Phoenix’s commitment to fostering a diverse and inclusive entrepreneurial environment. The addition of LG Energy Solutions further strengthens Arizona’s manufacturing base and highlights the region’s leadership in cutting-edge technologies.  

These positive indicators represent a market with strong potential. Increased demand for housing, driven by job creation and population growth, promises exciting opportunities. The Valley’s continued economic diversification ensures a stable and resilient investment landscape. 

Since 2019, Rise48 Equity has completed over $2.15 Billion+ in total transactions, and currently has $1.71 Billion+ of Assets Under Management located in Phoenix and Dallas. All of the company’s assets under management are managed by Rise48 Equity’s vertically integrated property management company, Rise48 Communities.