Highly Skilled Workers Are Flocking to Affordable Markets with a Growing Tech Presence, According to CBRE’s Annual “Scori...
June 30 2016 - 9:00AM
Business Wire
Robust influx of millennials in the
workforce is a significant factor in this year’s ranking of the top
50 “Tech Talent” markets in the U.S. and Canada
San Francisco remains the nation’s leading tech market, but the
competition for talent is getting tougher as more highly skilled
tech workers—especially millennials—are flocking to cities where
the cost of living is lower and tech jobs are plentiful, according
to CBRE Group, Inc.’s annual Research report, “Scoring Tech
Talent,” which ranks 50 U.S. and Canadian markets according to
their ability to attract and grow tech talent.
In their quest for highly skilled talent and for lower cost of
doing business, both new and expanding companies are establishing
footprints in these more affordable markets—including Nashville,
Charlotte, Tampa, Seattle and Phoenix—leading to a rise in demand
for office space and a decrease in office vacancy.
“Tech talent markets share several distinct characteristics,
including high concentrations of college-educated workers, major
universities producing tech graduates and large millennial
populations,” said Colin Yasukochi, who authored the report on
behalf of CBRE Research. “The robust entrance of millennials into
the labor pool contributed greatly to the growth in tech talent
across all 50 downtown markets in our ranking this year.”
Tech Talent Scorecard
Established tech markets, namely the San Francisco Bay Area,
Washington, D.C., and Seattle, once again dominated the top spots
on the 2016 “Tech Talent Scorecard,” with New York and Austin
rounding out the top five—a boost for Austin, which ranked #8 last
year. Rankings for the Tech Talent Scorecard are determined based
on 13 unique metrics including tech talent supply, growth,
concentration, cost, completed tech degrees, industry outlook for
job growth, and market outlook for both office and apartment rent
cost growth.
The top 10-ranked cities on the Tech Talent Scorecard were all
large markets, each with a tech labor pool of more than 50,000. In
the number 6-10 slots were Dallas/Ft. Worth, Boston,
Raleigh-Durham, Atlanta and Baltimore. Rounding out the top 15 were
Phoenix, Toronto, Chicago, Orange County and Minneapolis.
Top Momentum Markets
Meanwhile, small markets took dominant positions on the list of
top “momentum markets,” which ranks cities based on tech talent
growth rates between 2010 and 2015. Charlotte and Nashville, which
saw tech talent growth rate increases of 75 percent and 68 percent,
respectively, topped this year’s list.
“Tech talent growth rates are the best indicator of labor pool
momentum, and it’s easily quantifiable to identify the markets
where demand for tech workers has surged,” said Mr. Yasukochi.
The top 10-ranked momentum markets and their associated tech
talent growth rates were:
1.
Charlotte, NC
74.7%
2.
Nashville, TN
67.9%
3.
SF Bay Area, CA
61.5%
4.
Baltimore, MD
61.4%
5.
Oklahoma City, OK
59.0%
6.
Phoenix, AZ
58.1%
7.
Austin, TX
51.8%
8.
Tampa, FL
50.9%
9.
Seattle, WA
50.2%
10.
Vancouver, BC
50.1%
Influential Factors Shaping Tech Markets Today
The CBRE report highlighted several influential factors shaping
both large and small tech markets today.
- Educational Attainment/Tech
Degrees: Nearly 70 percent of the top 50 tech talent markets
have an educational attainment rate above the U.S. average (30
percent), with Seattle and Washington, D.C. boasting more than 50
percent of residents age 25 years and older with Bachelor’s degrees
or higher. More relevant to this study is the number of graduates
who have earned technology degrees. The top 10 markets ranked by
the number of tech degrees completed were New York, Washington,
D.C., Los Angeles, Chicago, Phoenix, Boston, the San Francisco Bay
Area, Atlanta, Columbus and Detroit. When comparing tech job
creation to tech degree completion, the San Francisco Bay Area
(89,600) and Dallas (25,500) were the largest net job creators,
while Boston (-17,200) and Phoenix (-12,400) had net job creation
deficits.
- Cost of Living: According to
Moody’s Analytics, 36 of the top 50 tech talent markets have a cost
of living above the U.S. national average. CBRE compared the
average apartment rent to the average tech-worker wage in each
market and found that even in the most expensive markets, tech
wages are able to cover the high cost of living (using the
affordability benchmark that allocates 30 percent of income to
housing). That said, top momentum markets like Charlotte and
Nashville clearly benefited from affordability with apartment
rent-to-tech-wage ratios of only 13 percent and 17 percent,
respectively. Oklahoma City, #5 on the momentum market list, has a
wage to apartment rent ratio of just 12 percent, making it the most
affordable of all 50 markets examined in the CBRE report.
- Presence of millennials: The
presence of higher educational institutions helps markets attract
high concentrations of millennials. Madison, Pittsburgh and Boston
took the top spots, each boasting millennials as 25 percent or more
of the total population. Six large tech markets increased their
millennial population by more than 10 percent since 2009, with
Washington, D.C. growing the fastest at 27.1 percent. During the
same period, five of the smaller tech markets increased their
millennial populations by more than 10 percent, with Salt Lake City
and Richmond growing at significantly faster rates than the
others.
Impact on Office Markets
“Although a relatively small portion of the economy, tech-talent
employers spurred economic activity and added more than 1 million
tech jobs during the past five years,” said Mr. Yasukochi. “As a
result, tech talent growth has recently been the top driver of
office leasing activity in the U.S. and high-tech companies are now
one of the main drivers of commercial real estate activity.”
High-tech companies’ share of major leasing activity increased
from 11 percent in 2011 to 18 percent in 2015 nationwide—the
largest single share of any industry. Many tech talent markets,
especially those with high concentrations or clusters of tech
companies, have seen rising rents and declining vacancies as a
result. Significant demand for office space in top markets that
have added tens of thousands of workers during the past five years
raised rents to their highest levels and pushed down vacancy rates
to their lowest. Rent growth is most prominent in the large tech
markets with office rents in the San Francisco Bay Area nearly
double what they were five years ago. But the decrease in vacancy
rate is present across both large and small tech markets, with the
Nashville vacancy rate the lowest of the top 50 tech talent
markets.
Of the 50 tech markets analyzed in the CBRE report, those
experiencing the largest rent cost increases from 2011-2016 are the
San Francisco Bay Area (+95 percent), New York (+46 percent),
Austin (+30 percent), Boston (+27 percent) and Denver (+27
percent). Tech markets experiencing the largest office vacancy rate
decreases during the same time period were Austin (-12.2 percentage
points), Toronto (-12.1 percentage points), Vancouver (-10.1
percentage points), Tampa (-9.2 percentage points) and Charlotte
(-8 percentage points).
To view the full report, please click here.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500
company headquartered in Los Angeles, is the world’s largest
commercial real estate services and investment firm (in terms of
2015 revenue). The Company has more than 70,000 employees
(excluding affiliates), and serves real estate owners, investors
and occupiers through more than 400 offices (excluding affiliates)
worldwide. CBRE offers strategic advice and execution for property
sales and leasing; corporate services; property, facilities and
project management; mortgage banking; appraisal and valuation;
development services; investment management; and research and
consulting. Please visit our website at www.cbre.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20160630005655/en/
CBRE Group, Inc.Christy Ingle,
949-725-8591christy.ingle@cbre.comorCorey Mirman,
212-984-6542corey.mirman@cbre.com
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