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Highly Skilled Workers Are Flocking to Affordable Markets with a Growing Tech Presence, According to CBRE's Annual "Scoring Tech Talent" ReportSan 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 (News - Alert) 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:
Influential Factors Shaping Tech Markets Today The CBRE report highlighted several influential factors shaping both large and small tech markets today.
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. View source version on businesswire.com: http://www.businesswire.com/news/home/20160630005655/en/ |