This week, Cushman & Wakefield released its “Tech Cities: The Global Intersection of Talent and Real Estate,” a new report that examines the key drivers of location strategy for tech occupiers, identifies key global tech markets and the impact of technology companies on the office. immovable. In the report, the company ranked Denver-Boulder as one of the best tech cities in the Americas based on a variety of factors.
Globally, technology is a bigger part of major economies – and commercial real estate – than ever before. Over the past decade, global technology employment has increased dramatically. In the world’s 15 largest economies, employment in information and communication has increased by almost 23 million workers and is expected to grow by 17%, adding an additional 12 million workers over the next 10 years.
“The technology sector will continue to drive economies around the world,” said David C. Smith, global head of Occupier Insights at Cushman & Wakefield. “Even with the recent volatility in the economy, the demand for tech talent isn’t going to diminish anytime soon. For this reason, the evolution of cities as clusters of tech talent and tech occupiers will remain critical for commercial real estate decision makers.
After a dip in mid-2020, demand for tech talent has increased. Globally, job openings for technology occupations (i.e. computer programmers, computer networking professionals, analysts and data scientists) have increased by more than 50% over the past of the first year of the pandemic. In the world’s 10 largest economies, there are now 2.7 million more office workers than at the start of the pandemic.
Cushman & Wakefield selected over 115 different technology cities around the world to assess the availability and cost of talent, office real estate and business environments. Top tech hubs in each region of the world are identified by aggregating 14 factors, weighing each based on perceived importance to the tech company market selection criteria, then validating through industry experts and model testing rigorous.
For North America, the San Francisco Bay Area ranked the top tech city, followed by Toronto, New York, Seattle, Los Angeles, Atlanta, Washington, DC, Dallas-Fort Worth, Boston and Montreal, in this order.
Talent remains a critical resource through which technology occupants assess potential locations. The San Francisco Bay Area leads North America with approximately 280,000 tech jobs, followed by New York City with 259,000 jobs and Washington, DC with 216,000 jobs.
“Finding and retaining top talent is a priority for tech companies, especially given the tight labor market and the technical skills some tech companies need,” Smith said.
Markets like Toronto and the San Francisco Bay Area will likely continue to be hotbeds of tech occupation. Markets with medium-sized labor pools may also have an attractive balance of talent, such as Montreal.
The number one cost for tech companies is talent. The San Francisco Bay Area continues to live up to its reputation as North America’s most expensive market for tech talent. Across 100 global markets, data scientists average a base salary of $90,000, however, the average salary is over $150,000 in the San Francisco Bay Area. Sun Belt markets offer savings compared to major US technology hubs, as do Canadian markets. For example, the weighted average base salary in Toronto is two-thirds that of the San Francisco Bay Area and 20% that of Seattle.
Occupiers are looking for opportunities to save on leasing and building high-quality office space that will serve as hubs for innovation and collaboration. The cost of real estate in North America is highest in traditional major cities, including New York ($78 per square foot), the San Francisco Bay Area ($76 per square foot) and Toronto ($66 per square foot). $ per square foot). Profitable options can be found throughout much of Latin America and secondary markets in the US Midwest, such as Kansas City ($23 psf), Cincinnati ($23 psf), and St. Louis ($19).
With increased flexibility, the quality and location of office space becomes more important. It is essential to identify markets with vibrant ecosystems of technology companies and employees, as well as ample availability of high-quality office space. Construction deliveries will continue to create opportunities for technology companies to move into new, high-quality spaces that attract and retain talent in critical labor markets.
In the Americas, New York City has the deepest pipeline of office space under construction, at 16+ msf. As a percentage of current inventory, however, this is only 6% of current inventory in Manhattan, well below the share of under construction inventory in Vancouver, Austin and Toronto, all of which have over 9% of the inventory currently under construction.
Click here to see the full report.