San Francisco – July 13, 2016 – The San Francisco Bay Area has yet to hit a saturation point when it comes to tech talent growth, according to CBRE Group, Inc.’s annual “Scoring Tech Talent,” research report. Not only is the San Francisco Bay Area the largest market in North America, it showed a slight acceleration in the rate of tech talent growth in 2014-2015 versus the previous two years. Overall, 120,000 new tech jobs were added from 2010-2015, that outpaced other large tech markets like New York and Washington, D.C. by more than double.
“The growth in tech talent in the Bay Area is astounding given the size of the market. It hasn’t slowed down in either volume or quality of tech talent, while most other large, established tech markets are experiencing slowing, or even decelerated, growth,” said Colin Yasukochi, San Francisco-based Director of Research and Analysis for CBRE and the author of the report. “Feeding the Bay Area’s continued growth is its ability to attract talent from across the country and world because there are not enough local tech degree graduates to fill all the open tech jobs.”
Tech Talent Scorecard
CBRE’s Tech Talent Scorecard, which ranks 50 U.S. and Canadian markets according to their ability to attract and grow tech talent, considers 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. In the top spot, the San Francisco Bay Area was followed by Washington, D.C., Seattle, New York, and Austin which clinched the #5 spot (representing that city’s entree into the top five).
While these tech markets continue to lead the pack year after year, the latest CBRE report showed strong tech talent growth rates in “momentum markets” where the cost of living is lower and tech jobs are plentiful, including Nashville, Charlotte, Tampa, Seattle and Phoenix.
“While our report shows a tremendous amount of growth in what we call ‘momentum markets’ around the country, none of it is diminishing the importance of the Bay Area. In fact, the reason there is growth in a lot of these other markets is because of the tech firms headquartered in the Bay Area are expanding in other markets, while continuing to rapidly grow in their home market at the same time,” said Mr. Yasukochi.
Impact on Bay Area Office Markets
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.
“Despite the high costs in the Bay Area, the region continues to attract the best in tech talent,” said Tim Kazul, executive vice president in CBRE’s Tech & Media Practice in the San Francisco Bay Area. “The Bay Area has been able to maintain its momentum because it is the epicenter of innovation, and people want to be involved in what the companies are doing here.”
Office asking rents have risen a whopping 95 percent to $59.59 per sq. ft. from Q1 2011 through Q1 2016, the most in the CBRE study, and nearly 50 percentage points more than that of New York, which had the second-largest growth rate over the same time period. The vacancy rate has dropped 820 basis points to 6.9 percent over the same period, making the Bay Area the second-tightest market in the CBRE study, behind Nashville, and ahead of New York.
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.