Governor Doug Ducey signed legislation in February creating a regulatory sandbox for property technology companies in Arizona. H.B. 2673 establishes a “Property Technology Sandbox” for businesses to test innovative products or services in the real estate industry. By reducing costly barriers to entry, the bill promotes the development of disruptive technologies affecting the transfer and management of commercial and residential property.
“PropTech is changing the way we rent, sell, buy, develop and manage property,” said Governor Ducey. “With this forward-thinking legislation, PropTech companies will have a place to develop and test their products — while benefiting and protecting consumers. With this bill, Arizona continues to send the message loud and clear that our state is the best place to develop cutting-edge technologies.” Blockchain is the technology that first comes to mind but watch for others to emerge in coming years.
This is the second such “sandbox” launched in the state. The first was Arizona’s FinTech Regulatory Sandbox launched in early 2018. Legislation signed by Gov. Ducey at that time made Arizona the first state in the nation to remove costly barriers to entry for companies developing products and services in the financial services industry.
Startup Predicts ‘Hypergrowth Rates’
Arizona’s proactive support of such technologies will help it compete for investment as they become more ubiquitous across industry sectors. In March, Myndshft, a technology company that specializes in blockchain and artificial intelligence in health care, announced that it plans to triple its team from 30 to over 100 employees this year. To accommodate this growth, it relocated from its 4,000-sq.-ft. (370-sq.-m.) space to a new, 11,000-sq.-ft. (1,022-sq.-m.) office in the Red Mountain Business Park in Mesa. The move signals Myndshft’s strong commitment to the Arizona technology community.
“We decided to stay in the Phoenix/Mesa area because of its strong local workforce and high quality of living,” said Ron Wince, founder and CEO, Myndshft. “There’s a young and educated workforce in place, which helps to create a viable talent pool for a tech company like ours.”
Myndshft’s new office will allow for future growth and expanded strategic partnerships within Arizona’s burgeoning digital-health sector. Founded in 2015 with two employees, Myndshft has experienced hypergrowth rates of 400 percent with plans to aggressively recruit 75-85 employees over the next nine months across all its departments, particularly in sales, software engineering and operations.
“Myndshft is a great addition to the Falcon Business District and their exponential growth is bringing high-tech jobs to Mesa,” said Mayor John Giles. “Health care administration is changing and Myndshft is leading the way in using technology to simplify processes.”
Employment in Arizona’s technology industry expanded by an estimated 5,127 jobs in 2018 and contributed $31.3 billion to the state’s economy, according to Cyberstates™ 2019, published in March 2019 by CompTIA, a leading technology industry association. With 241,671 workers, Arizona ranks 18th among the 50 states and the District of Columbia in net tech employment. This accounts for 8.1% of the state’s total workforce. The average tech industry wage in Arizona is $99,960, compared to the state’s average private sector annual wage of $49,500.
“It is especially encouraging to see the increase in job postings for emerging technologies such as IoT, smart cities, drones, AI, and more,” said Steven G. Zylstra, president and CEO of the Arizona Technology Council. “It shows that companies are choosing Arizona for our quality of life, pro-business laws and the talent pool in these new sectors.” The tech sector is responsible for an estimated 10.1% ($28.5 billion) of the overall state economy. The state is home to more than 8,500 tech business establishments.
Mining for Efficiency
Established industries also benefit from new, high-tech entrants to Arizona’s business landscape: Also in March, Sudbury, Ontario-based Symboticware Inc. opened its U.S.-Mexico headquarters in Tucson, for example. The company describes itself as “an industry leader that provides an industrial IoT hardware and software platform to help customers unlock, collect and analyze valuable data from their industrial mobile and fixed assets to help improve business outcomes based on: optimizing productivity; identifying opportunities to increase efficient use of their resources; increasing equipment availability through better condition and preventative maintenance; and enhancing safety by real-time feedback to operators.” Companies involved in the mining industry are typical of Symboticware’s customers. The office plans to grow rapidly with the hire of 20 high-tech professionals in the next five years.
“As a key regional mining corridor, Tucson, Arizona, is what Sudbury is to Ontario,” said Kirk Petroski, President and CEO of Symboticware. “When our first offices opened there in 2008, our focus has been on the development and advancement of technology for the mining industry. We are proud to expand our services into the United States and Mexico through our Tucson office.”
“Symboticware is an excellent example of emerging technology driving transformation and creating value in established industries,” said Sandra Watson, president and CEO of the Arizona Commerce Authority. “The selection of Tucson for Symboticware’s new regional headquarters operation highlights Southern Arizona’s attractiveness to innovative, growing companies.”
Employment Growth to Increase
In February, the Arizona Office of Economic Opportunity released a report projecting Arizona will add more than 165,000 jobs over a two-year period. From the third quarter of 2018 through the second quarter of 2020, Arizona’s employment is expected to increase from 3,015,242 to 3,180,933, representing an annualized growth rate of 2.7 percent — an increase from last year’s projection of 2.6% and more evidence of Arizona’s continued acceleration over the last 12 months.
Arizona is projected to see the highest job growth rates in construction (5.8%) and manufacturing (3.6%). The largest job gains are expected in the education and health services (37,126 jobs) and the professional and business services (26,177 jobs) sectors, although gains are projected across all 11 of Arizona’s top industries.
In addition to the projected job growth, Arizona also saw positive gains in its median household income from 2016 to 2017, according to data from the United States Census Bureau. Arizona’s median household income rose 4.8% — more than double the national growth rate of 1.8%. According to the data, Arizona’s median household income reached $61,125, a record high.
“Arizona’s economy is booming,” said Governor Ducey. “Not only is Arizona projected to add 165,000 jobs over the next two years, Arizona families are taking home more dollars and incomes are rising at one of the fastest rates in the country. This is positive news that affects our entire state — and we have Arizona’s hard-working entrepreneurs, business leaders and employees to thank. We will continue to focus on advancing Arizona’s business-friendly environment to bring even more jobs and opportunity to our state.”