Technology the Economy and Commercial Real Estate – Where It’s Happening

We all use technology daily, but technology impacts some economies and commercial real estate (CRE) markets more than others.  The tech sector, with 7.2 million workers at tech companies in the U.S., now makes up  4.8 percent of the U.S. workforce.

A just-released study, Cushman & Wakefield’s Tech Cities 2.0, examines where tech has the greatest impact on the economy and commercial real estate.  The 25 Tech Cities were categorized in three separate groups:

Tech is a Critical Component of the local economy and CRE market – tech companies account for more than 8 percent of all jobs

  • Austin
  • Boston
  • Provo
  • Raleigh/Durham
  • Salt Lake City
  • San Diego
  • San Francisco
  • Silicon Valley
  • Seattle
  • Washington, DC Metro

 Tech is a Key Driver of the local economy and CRE market — tech companies account for 6 to 8 percent of all jobs:

  • Atlanta
  • Dallas/Fort Worth
  • Denver
  • Minneapolis/St. Paul
  • Montreal
  • Portland, OR
  • Toronto
  • Vancouver

Tech is Important to the local economy and CRE market, but there are other important sectors as well — tech companies account for less than 6 percent of all jobs:

  • Baltimore
  • Charlotte
  • Chicago
  • Greater Los Angeles
  • South Florida
  • New York City
  • Philadelphia

The tech sector share of total employment in the these markets as of mid-2018 was as follows:

The report also notes five cities to watch for future tech growth and economic impact:

  • Detroit – auto tech, Fintech and ecommerce startups
  • Pittsburgh – upswing in venture capital funding, Carnegie Mellon University engineering & computer science graduates, startups & big tech
  • Phoenix – low cost of living & quality of life make this market a pressure relief valve for Bay Area tech companies
  • Houston – energy, alternative energy and booming medical-biotech segment
  • Tampa – biotech startups, median & social media platforms relocating to Tampa for cost & quality of life

The following is taken directly from Cushman and Wakefield’s summary of the Tech Cities 2.0 report,  These are direct quotes from the Cushman & Wakefield Study:

“Key findings from Tech Cities 2.0:

  • Total employment in the Tech 25 has increased an average of 2.1% per year since 2010, compared to 1.4% per year for the rest of North America
  • Since the beginning of 2017, 42% of the square footage in the top 100 leases in North America were signed by tech companies, more than double the share of the number two segment financial services
  • The fastest growing tech employment market since 2010 is Provo, Utah. Though a smaller market than the others on the list, the number of people employed by tech companies increased 64.9%, surpassing the 62.7% increase in San Francisco
  • Average asking rents in cities like Atlanta, Austin, Seattle, and San Francisco have increased more than 50% since 2010
  • Property prices are skyrocketing. Among the Top 25, property prices have increased on average by 59%, with the greatest increases happening in Austin, Silicon Valley, and San Francisco
  • Cities that are targets for venture capital funding are the most important tech cities in North America. Among the Top 25, VC funding grew by an average of $2.0 billion compared to $457 million for the top 101 markets
  • The top four cities for new construction are all cities where tech is a critical factor in the local real estate market, including: Austin, Raleigh-Durham, Seattle, and San Francisco”

To access Cushman & Wakefield’s Tech Cities 2.0 report click http://www.cushmanwakefield.us/en/news/2018/09/tech-cities-2-report

Not only have these tech-job centric cities outperformed the overall U.S. economy, the expectation is for more of the same.   In terms of hockey great Wayne Gretzky,  these cities are already where the puck is going to be.

Ted

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