THE PHOENIX PHENOMENON Due in part to the Californian diaspora, Arizona has shifted from Cardinal red to Barney purple. This trend certainly has some long-time residents grumbling, but the overall economic impact on the state has been positive. The explanation for Arizona’s success could be described as the opposite of California’s demographic decline. Importantly, Arizona ranks in the best one-third of states for overall tax burden. 16 This helped businesses maintain more employees after the pandemic started; in the summer of 2020, Arizona had the sixth- lowest unemployment-claims rate. 17 Indeed, 137,000 jobs are projected to be created in Phoenix in 2021, the fastest annual growth rate since 1996. As of this month, Arizona led the entire nation in small business growth for the second month in a row. 18 Large businesses also are important to the Phoenix economy. Major employers include such diverse companies as American Express, Intel, GoDaddy, Honeywell, Wells Fargo, Banner Health, Southwest Airlines, and a couple of upstarts called Amazon and Apple. 19
The growing number of retired Americans in cold-winter states makes the Southwest an increasingly attractive target for relocation or snow bird living. Anyone who visits Phoenix regularly will notice the semi-annual return and departure of Baby Boomers in the fall and spring. Many of those folks now opt to live in Arizona full-time, trading a dry heat in the summer for a snow-free winter. In many communities around the perimeter of Maricopa County, retirees from around the country can enjoy a comfortable, affordable living within their means. On the landlord side of the equation, average apartment rents in the Phoenix area have increased for each of the last five years. This has not gone unnoticed. Investors have flocked to Arizona, driving down average apartment cap rates to 5%. 20 There are relatively lower hurdles for new construction in Arizona, which has led to more extreme boom/bust cycles in past years than other U.S. markets. As of July 2020, there were over 30,000 Phoenix- area apartment units slated for completion by 2023. 21 While there is no shortage of buildable land, there is only so much water in the Grand Canyon State. Eventually, population pressures will force Arizonans to pay more for our most vital commodity, and this could have a long- term impact on continued economic growth. CONTINUING TO THRIVE ALONG I-35 It has been six months since the Great Texas Freeze of 2021. In case you forgot the
ARIZONA LED THE ENTIRE NATION IN SMALL BUSINESS GROWTH FOR THE SECOND MONTH IN A ROW.
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