2017 Regional Report: The Southwest

“We’ve seen a number of companies moving from Austin to San Antonio. Austin had a big burst of development, but that also brings traffic, congestion and the inability to find talent,” says Saucedo-Herrera. Cities between the two are growing even faster. Adriana Cruz, president of the Greater San Marcos Partnership, says the city was ranked fastest-growing for year-over-year growth.

“San Marcos has been serving as a “connector” between the manufacturing hub of San Antonio and the tech hub of Austin.

Cruz says the city has been serving as a “connector” between the manufacturing hub of San Antonio and the tech hub of Austin. It is also home to Texas State University, which opened an advanced materials incubator in 2012 that will eventually become a 68-acre park.

“We’ve had major developments in the past year by bringing northern San Antonio and southern Austin closer together. The communities along this corridor are seeing rapid growth,” says Cruz. Timothy Burbey, CEO of Blueshift International Materials, moved the base of the company’s operations from San Diego to San Marcos in 2015.

Burbey says San Marcos offered an impressive selection of engineers and chemists from Texas State through its application-driven Ph.D. programs. He also says the fact that the city is within equal commuting distance of both San Antonio and Austin offered a prime location. “It’s part of a diversified economic system. You have a lot of different things going on between the two cities. Amazon just put a facility here. Looking out my window, I see new buildings going up,” says Burbey.


NO. 6 ARIZONA

A GROWING HUB OF FINANCIAL SERVICES

While Arizona has historically been known for manufacturing, mining and trade with Mexico, its capital city is quickly, and quietly, becoming a major hub for financial services. A recent study by real estate services firm CBRE found that Phoenix is the second-largest market for the advanced business services in the financial sector. Nearly 174,000 residents (8.7 percent of the population) work in financial activities, an increase of 22 percent since 2010.

“Nearly 174,000 residents of Arizona work in financial activities, an increase of 22% since 2010s.

Chris Camacho, president & CEO of the Greater Phoenix Economic Council, says roughly a quarter of the 280 companies evaluating a location near Phoenix as of late-October were in the financial services or IT sector. He says companies are using Phoenix as a way to scale into West Coast markets with cost-efficient operational hubs. Farmers Insurance, USAA, Northern Trust of Chicago, Schwab and Vanguard have all expanded to the area in recent years.

State Farm opened a new regional headquarters in Tempe, Arizona, in 2015 with 1,000 employees and plans to eventually base 8,000 employees there. “We’ve seen extraordinary growth in the financial services industry driven by the ability to access talent quickly, scale up, grow revenue and minimize costs of business,” says Camacho.

James Lundy, III, CEO of Alliance Bank of Arizona, says the growth in financial services has been fueled primarily by a strong talent pool. The area’s three major universities are also putting a strong emphasis on MBA programs, while more than a dozen two-year institutions are also offering programs in financial services. Lundy says the city’s aerospace and defense sector has also attracted workers that can easily transition to the financial services sector. “We have a good talent pool, especially for mid-level financial services jobs. Obviously the companies have been able to find the talent to staff the expansions,” says Lundy.

Financial services companies are also moving their data centers to the area. Arizona passed a law in 2013 that offered enhancements for data center owners and operators by expanding the class of facilities that can qualify as sustainable redevelopment projects. The process for meeting the capital-investment threshold was also eased by adding the cost of improvements and of leased equipment to meet the threshold. The state is now home to more than 50 centers, including ones that serve Charles Schwab and PayPal.

In 2015, Apple announced it would construct a $2 billion global command center in Mesa, Arizona, one of the largest single investments it has ever made. Lundy calls Arizona “one of the best kept secrets in the country” and says the growing talent, proximity to California, and “dynamic” downtown is offering a compelling location for new companies.

“We’ve recently had some growth in various tech startups and some expansions of companies successfully launched in the Bay Area that seek a more affordable area in which to grow,” says Lundy.