Southern California’s wildfires have remained in the news for over a month, representing billions of damage to property and livelihoods for our neighbors to the west—and the recent flooding and mudslides have compounded the problems. With the obvious strain on the California economy and housing, it stands to reason that Arizona could be positioned to be one of the safety valves to assist displaced Golden State residents.
Several news outlets commented on the possible implications, including:
- In “LA fires likely mean wave of renters and homebuyers headed to metro Phoenix,” AZ Central noted an uptick in requests from Los Angeles-area residents looking for Valley rentals and that high costs and long rebuilding timelines could make Greater Phoenix an appealing option.
- ABC 15’s coverage, “Could Southern California wildfires impact Arizona housing market competition?” had a more mixed opinion, with some experts anticipating a migration surge while others had yet to observe a significant change.
The full impact will take months to assess and years to address: sorting through insurance issues and the reconstruction of homes, neighborhoods, and businesses amid city, state, and federal red tape.
Long-Term Migration and Maturation in Phoenix CRE
Regardless of the most recent fires, Californians have been migrating in a net positive direction to Arizona for years. At a rate of more than 170 people per day, the past decade has seen about 630,000 Californians relocate to Arizona—and along with them, numerous headquarters relocations and company expansions. The last time we saw a significant outside influence on the migration patterns was during the Covid-19 pandemic, when people suddenly had a lot more flexibility with when and where they could work. Again, it’s too early to know the full impact, but the relative excess inventory in the Greater Phoenix multifamily sector could end up being mutually beneficial for Californians needing an alternative during a prolonged rebuilding period. Beyond the immediate California factor, the start of 2025 marks a time of maturation in the Greater Phoenix economy. Increasing numbers of companies are interested in relocating to the Valley, particularly in technology—paying off on the long-term strategy of developing the Silicon Desert. Taiwan Semiconductor and Amkor alone represent billions in investment and economic impact. In addition, notable relocations of headquarters last year to Phoenix included Comtech (a satellite telecom company from New York) and USAA Federal Savings Bank (formerly based in San Antonio).
Such moves and investments most visibly impact the industrial side of CRE and job creation, but they also echo within the ecosystem of suppliers, housing, and support infrastructure from grocery stores to entertainment complexes. With new facilities and large employers flowing into the market, we are seeing an uptick in owner-operator interest, as well as additional tenant interest. That type of symbiotic expansion bodes well for the economic growth within our community and the health of the overall Phoenix CRE sector.
