CBRE Ranks Top 50 Tech Talent Markets
- Jul 18, 2019
The San Francisco Bay Area and Seattle remain the two highest-rated tech talent markets in North America, followed by Toronto, Washington, D.C., and New York City. Meanwhile, smaller markets such as Tucson, Ariz., and Hamilton, Ontario, Canada, are absorbing some of the tech-labor demand, according to CBRE’s annual evaluation of tech centers.
The scoring tech talent report notes shrinking supplies of available tech talent in leading markets has led to hiring momentum in smaller and upstart markets in both the United States and Canada. For the first time, CBRE has included a list of fast-growing “opportunity markets” along with the top 50. Tucson, which has a 90 percent increase in tech jobs over five years, topped the opportunity market list, followed by Hamilton with a 52 percent gain over five years, Waterloo, Ontario, Canada, with a 40 percent gain, Las Vegas with a 35 percent gain and Des Moines, Iowa rounding out the top 5 with a 31 percent increase.
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“Smaller and opportunity markets, especially those with a tech talent pipeline from a major university and urban lifestyle characteristics should see continued growth as tech employers seek out additional markets for growth,” Colin Yasukochi, director of research and analysis for CBRE, as well as co-author of the report, told Commercial Property Executive.
Yasukochi said the overall tech talent pool in the U.S. grew by 16 percent in the last five years, compared to an average growth of 9 percent for all other U.S. professions. That fast-paced growth depleted qualified talent pools and led to smaller markets being able to offer additional talent pools for employers looking to expand their geographical reach. The report notes most of these smaller markets are located in Canada and the U.S. Midwest and South.
CBRE also included a separate list of “momentum markets” that have accelerated their tech talent employment growth the most. Orlando, Fla., leads that list with a 14.1 percentage point increase in growth rate. San Diego (up 10.2 percent), Chicago (up 8.0 percent), Cleveland (up 7.9 percent) and Long Island, N.Y., (up 7.1 percent).
The report stated more than 6 million highly skilled workers across the U.S. and Canada, compared to about 5.7 million in 2018, comprise the tech talent that is leading global innovation. CBRE ranks markets on its tech talent scorecard based on 13 metrics, including tech talent supply, concentration, cost, completed tech degrees, industry outlook for growth and market outlook for office and apartment rent cost growth.
Impact on office leasing
The tech industry has been the top driver of office leasing activity in the U.S. during the past five years, adding nearly 700,000 jobs, primarily in the high-tech sector. High tech accounted for about 20 percent of major office leasing activity in the first quarter in the U.S.—the most of any of other industry. That’s compared to 11 percent in 2011. The demand for office space in top markets has added tens of thousands of workers to the major markets and led to higher rents and lower vacancy rates. Markets with the tightest vacancy are Madison, Wisc., at 4.6 percent, followed by Vancouver, Canada, at 4.7 percent, Charlotte, at 5.9 percent and 6.1 percent in the San Francisco Bay Area.
The report notes rent growth is highest in the large tech markets with office rents in Orange County, Calif., rising 50 percent from five years ago. “The tight labor market for tech talent and low level of available office space inventory has led to a surge in real estate activity in major markets to position tech employers for future growth. The San Francisco Bay Area, Seattle, Los Angeles, Chicago, Austin, Manhattan and Washington, D.C. have been the most active markets,” Yasukochi told CPE.