Phoenix Lost Over 33,000 Jobs in January, but Recent Announcements Are a Bright Spot

Article originally posted on CoStar on March 18, 2021

Greater Phoenix lost about 33,100 jobs in January, according to the latest employment report from the Bureau of Labor Statistics, virtually undoing the gains the market accrued in November and December. Job losses in January follow typical seasonality patterns; temporary hires during the holiday shopping season were let go in January.

January marked the first month of job losses since July. Monthly job cuts were most significant in the trade, transportation and utility sector (-16,800 jobs), which includes retail positions. The professional and business services sector, usually a user of office space, shed 5,200 jobs in January. The job cuts and disappointing job gains in December derailed hopes of a steady and swift recovery.

But there are grounds for optimism. The distribution of vaccines and the latest COVID-19 relief bill should stimulate spending and support hiring. Additionally, affordable markets with large pools of talent, such as Phoenix, will be beneficiaries of businesses leaving or expanding outside of expensive, dense and highly regulated cities. Prospects looking to locate in Phoenix are up from one year ago, according to the Greater Phoenix Economic Council, a regional economic development organization. While its prospects are across the globe, about 28% are based in California.

Over the past year, there has been a substantial increase in the number of industrial prospects looking to expand in Phoenix, which is set to support demand for industrial space. Last year, the Phoenix industrial market posted its best year for industrial demand, with net absorption, the difference between move-ins and move-outs, approaching 17 million square feet. Industrial users account for more than 70% of the Greater Phoenix Economic Council’s prospect pipeline. Office users continue to seek Phoenix expansions, but the number of its prospects are currently down from the previous fiscal year.

One of the most significant job announcements since the onset of the pandemic was for Taiwan Semiconductor Manufacturing Co. Ltd.’s $12 billion semiconductor plant in Phoenix. The project, which was initially announced in May, is estimated to create more than 1,600 jobs. The contract silicon chip maker purchased land for the new fabrication facility in North Phoenix and is slated to begin construction on it later this year. Suppliers for the manufacturer have also announced plans to locate in the market but have not yet announced a specific location or the expected number of jobs.

ElectraMeccanica Vehicles Corp., an electric vehicle maker based in Canada, recently announced it selected Mesa for a new assembly facility that would create 500 new jobs. The electric vehicle maker plans to build the facility near Phoenix-Mesa Gateway Airport. ElectraMeccanica chose Phoenix after a nationwide search. Numerous automakers and driverless vehicle companies, including Lucid MotorsNikola and Waymo, have expanded in the region over the past few years, creating jobs, building new facilities and leasing industrial and office space.

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