Collaborative, Creative Space and Attractive Neighborhoods Essential for Technology Employers
Report Finds Opportunities Exist for New Mixed-Use Development Outside of Traditional Urban Centers
Los Angeles — September 4, 2013 — The clustering of highly-skilled, like-minded technology professionals, “tech talent,” is driving demand for office space, with implications for real estate occupiers and investors, in markets from Washington, D.C. to Seattle, according to a new report from CBRE Group, Inc.
CBRE identified five markets with the highest “tech talent” ratings: San Jose, Washington, D.C., San Francisco, Boston and Seattle. These markets are very well positioned to attract and retain highly skilled technology professionals based on factors such as the depth of the pool of qualified professionals, labor costs, office rents and eight others.
“The cornerstone of the Bay Area’s innovative ecosystem is talent creation and attraction. San Francisco and San Jose combined grew its supply of newly employed tech talent by the more than 37,000 people between 2010 to 2012, the most in the U.S. The cost of office space and living in the Bay Area remains among the highest in the nation and a concern to ongoing growth, although our study found innovation potential of the tech talent supply to be much more important than labor and real estate costs,” said Colin Yasukochi, Director of Research and Analysis, Northern California.
The report finds that increasing competition for talent is necessitating shifts in workplace strategies to accommodate employees’ lifestyle requirements. Highly sought professionals want to work in collaborative, creative space in neighborhoods with an entrepreneurial culture and strong business networks. Live-work-play environments, such as San Francisco’s South of Market district, that maximize social interaction opportunities for workers help to spark innovation and improve productivity. As a result, worker lifestyle requirements are now significantly influencing the neighborhoods where companies locate within markets.
CBRE sees more opportunities for urban infill mixed-use development and redevelopment in tech talent markets. Vacant warehouses are attractive to many creative space users because open floor plans are not only conducive to collaboration, but are also often located in emerging entertainment districts with significant lifestyle amenities. Urban settings may also have a cost advantage over the suburbs because amenities like dining options, fitness centers, etc. are often integral features of the surrounding urban environment, and do not need to be available within the building.
San Francisco’s South of Market (SoMa) district is a strong example of a locational shift that occurred over time due to tech talent. Mixed-use strategies in that market were executed before the submarket was “priced-in” and many early real estate investors in SoMa outperformed the overall market. Similar opportunities exist for investors in markets such as Boston, San Jose, Seattle and Washington, D.C.
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 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 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.