Key West Coast Markets Rank High for Tech Talent Employment Nationwide Post-COVID

CBRE, San Francisco, Seattle
Courtesy of Bruce Warrington

By Meghan Hall

While the tech sector was strong prior to the COVID-19 pandemic, technology became even more ingrained into day-to-day lives, solidifying and strengthening its business presence. Tech employment grew 0.8 percent in 2020 as other industries contracted by 5.5 percent, and its resilience and position as an “accelerator of economic transformation” will continue to benefit major markets, particularly San Francisco, Seattle and San Diego, according to CBRE’s annual tech talent report. 

“Many factors already are in place to fuel strong tech-talent job growth this year and beyond coming out of the pandemic,” said Todd Husak, Managing Director of CBRE’s Tech & Media Practice Group. “Big tech markets will gain from their established pipelines of tech graduates and many workers’ return to city centers. Smaller markets will reap benefits from their cost advantages in labor and real estate as well as the tech industry’s embrace of remote work for certain employees.”

San Francisco

Out of CBRE’s rankings, the San Francisco Bay Area held onto the top spot for the ninth consecutive year in a row. In the region, demand for tech services have grown during the pandemic and work-from-home became a more permanent fixture. According to CBRE, the Bay Area’s firms are “leading the economic recovery” and COVID-19 disruption has allowed firms to thrive.

“Despite headwinds caused by the global pandemic, Bay Area tech employers were able to pivot and respond to new business dynamics, that’s why it remains the global innovation capital,” said Luke Ogelsby. “With tech offices reopening, record venture capital investment and a welcoming IPO market, the Bay Area economy has ample fuel to further extend the rebound already underway for many years to come.”

The San Francisco Bay Area also reported the highest average annual tech wage–at $144,370–a number which has grown by 17 percent over the past five years. Software developers in the region make $147,747 per year, the highest out of all markets. 

The region, with its education sector, is also well-positioned for growth: the Bay Area ranks first for educational attainment, with 51.7 percent of residents 25 or older holding a bachelor’s degree or higher. Nation-wide, the average sits closer to 33.1 percent. The region also has the fifth most tech graduates, with 10,965 graduates in 2019, a 65.2 percent increase over the past five years. 

However, for all of its education attainment, the Bay Area continues to create more tech jobs than it does talent. The region ranked seventh for “brain gain,” and added 5,606 more tech jobs than graduates over the past five years.

On a more challenging note, the Bay Area does remain the most expensive out of CBRE’s top 50 tech-talent markets. The average one-year operating cost for a 500-employee company occupying 75,000 square feet comes to $68.6 million. Average office rents are also the second most expensive. Rents have increased 19 percent over the last five years, and while those rates have moderated some as a result of recent vacancy spikes, the market remains competitive.

Seattle

Over the past year, the Seattle metro has climbed the rankings and sits second to San Francisco, according to CBRE. Currently, Seattle has the seventh largest tech talent labor pool in North America, with 184,660 workers, and tech-related jobs account for 9.4 percent of total jobs in the city.. Based on CBRE’s data, this represents a 35.4 percent increase from 2015.

“Office demand has picked up over the past 30 to 60 days, with tech being a major driver of that demand. With strong techtalent migration to Seattle over the past several years, combined with Seattle’s deep bench of skilled, local talent, both established blue chip firms and emerging startups are confident their labor needs will be met. Seattle’s unique tech ecosystem, quality of life and relative affordability compared with coastal markets are several advantages that will continue to attract high quality tech talent to the region,” said Michael Dash, Vice Chairman with CBRE in Seattle.

Seattle’s tech talent pool is growing quickly, and the metro added an impressive 48,300 jobs over the past several years. Its millennial population also grew the fastest since 2014, at a rate of nearly 22 percent. The city is also the second most concentrated millennial market behind Austin, Texas, accounting for about a third of Seattle’s population.

Like other tech-centric markets, Seattle ranked high for educational attainment, with 44.1 percent of residents over 25 holding a bachelor’s degree, and more than 30 percent of tech-graduates are female, making the city one of the most gender-diverse for tech. 

Seattle has also been a top job creator for tech. Over the past several years, it added 29,336 more jobs than tech degrees, ranking it second for “brain gain.” Its wages are also the second highest at $126,730 per year. Wages have climbed more than 15 percent over the past five years, reports CBRE.

Despite its rapid growth, Seattle is not the most expensive tech market, ranking seventh for rent growth. Rent growth came to 34 percent in recent years. The average operating cost for 75,000 square feet of space, however, comes to $56.7 million per year, the third most expensive among the top 50 markets.

Southern California

In Southern California, the Los Angeles and Orange County region saw the largest jump in ranking, climbing eight spots to number nine.

The start of Southern California, however, continues to be San Diego. The City was ranked number 19 overall by CBRE and has the 18th largest tech talent pool nationally with 70,350 tech workers. This constitutes a 4.1 percent increase in tech employment since 2015. Overall, tech-related jobs make up five percent of San Diego’s total workforce. The tech market is expected to continue growing due to its proximity to a number of major universities and research institutions–including University of California San Diego, the University of San Diego, San Diego State and Point Loma Nazarene University–and large labor pool.

“San Diego continues to see strong growth in the tech sector even through the turmoil of the pandemic,” said Andy Ewald, First Vice President at CBRE in San Diego. “For the second year in a row, the University of California San Diego has ranked ninth in the nation for its educational program dedicated to engineers, and computer scientists by the U.S. News & World Report Rankings. By cultivating this robust pool of talent, San Diego continues to attract a significant amount of capital to support innovation and has captured the attention of the tech giants who now look aggressively to the San Diego market for expansion.”

CBRE also emphasized that the potential for tech expansion is ___ in San Diego. 39.9 percent of residents over the age of 25 hold a bachelor’s degree or higher and is the fifth-most concentrated millennial market, with 31.7 percent of the local population falling within the age cohort. Additionally, between 2015 and 2019, San Diego saw 18,875 tech graduates, although only 2,760 tech jobs were created. CBRE notes that this created a “brain drain” of 16,115 graduates leaving the market.

For companies looking to grow, the average one-year operating cost for a 500-employee company occupying about 75,000 square feet of space would come to $50.8 million per year. While not cheap, the market remains inexpensive compared to other high-tech markets ranked within CBRE’s top 50.

West Coast Commercial Real Estate News