D.C. outpaced only by Silicon Valley for ability to attract and grow tech talent.Washington, D.C., April 13, 2015 – As tech talent clustering emerges as a growing driver of demand for office space across the U.S., a new CBRE Research report finds D.C. ranked second out of 50 U.S. markets for its ability to attract and grow tech talent. The report “Scoring Tech Talent” credits a high concentration of college-educated labor and an upswing in millennials for nudging the D.C. market into a slot that is outranked only by Silicon Valley, California.
“This report demonstrates that the Washington D.C., region, with its large concentration of highly educated professionals and surging millennial workforce is a top ranked destination to attract and retain tech talent. At the same time, D.C.’s rent and wage obligations rank lower than other top-tier tech locales, such as Silicon Valley or New York City. As a result, Washington can be viewed as a relative bargain for office-user overhead. All of which should point to a bright future for DC tech.” said David Ritchey, Senior Vice President at CBRE and Technology Practice Leader for the Washington, D.C. region.
The CBRE report finds that while D.C. saw explosive growth in millennials—up 26.5% from 2009 to 2013—the Washington area also experienced a nearly 16% growth rate in tech talent from 2010 to 2013. D.C. also comes in second behind Seattle, Washington, for those ages 25+ who have achieved a bachelor’s degree or higher. Concurrently, the wage and rent obligation for a firm of 500 employees occupying 75,000 sq. ft. is estimated to be well below that of Silicon Valley, San Francisco, the San Francisco peninsula, and New York City.
The “Tech Talent Scoreboard” also ranked smaller, up-and-coming markets as top “momentum markets” based on tech talent growth rates. Oklahoma City and Nashville had tech talent growth rates of 39 percent between 2010and 2013, higher than Seattle (38 percent) and just below that of San Francisco (44 percent) and Baltimore (42 percent). Portland, Oregon, and Charlotte both saw tech talent growth rates of 28 percent, outpacing well-known tech markets like Austin (26.5 percent), Silicon Valley (20.8 percent) and Los Angeles (13.6 percent).
“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 Colin Yasukochi, director of research and analysis for CBRE. “Tech talent growth, primarily within the high-tech industry, has recently been the top driver of office leasing activity in the U.S.”
Though tech talent comprises only 3.4 percent of the total U.S. workforce (4.4 million workers), the high-tech industry accounted for more major U.S. office leasing activity than any sector in both 2013 (13.6 percent) and 2014 (19.0 percent), according to the CBRE report.
The top 10 large markets on the Tech Talent Scorecard (identified as markets with a talent pool above 50,000 tech professionals) were:
1. Silicon Valley, CA2. Washington, D.C.3. San Francisco, CA4. San Francisco Peninsula, CA5. New York, NY6. Seattle, WA7. Boston, MA8. Baltimore, MD9. Austin, TX10. Atlanta, GA
Dallas, Orange County, Chicago and Raleigh-Durham took the 11, 12, 13 and 14 spots on the list before a small market—defined as a market with a tech talent labor pool of less than 50,000—made its way onto the list. The top-ranked small markets included:
15. Oakland, CA16. Edison, NJ23. Columbus, OH25. Salt Lake City, UT26. Portland, OR27. Newark, NJ29. Long Island, NY30. Kansas City, MO31. Charlotte, NC33. Cincinnati, OH
The report also looked at which markets present the greatest cost for occupiers based on wages paid to employees and rent paid for office space. CBRE Research combined these two costs for a “typical” 500-person tech firm needing 75,000 sq. ft. of office space for each market and found that, for large markets, Silicon Valley is the highest cost and Detroit is the lowest cost. For smaller markets, Oakland is the highest cost and Oklahoma City is the lowest cost.
The CBRE report also identified various characteristics that are shared by tech talent markets:
- Gender Diversity: The U.S. average breakdown for tech talent occupations is 76.2 percent male and 23.8 percent female. Half of tech talent markets have a greater concentration of women in these occupations when compared with the U.S. average, but the numbers are still imbalanced. The most gender-diverse tech talent market is Philadelphia, where females occupy 31 percent of tech talent occupations.
- Education: Nearly 75 percent of the top 50 tech talent markets have an educational attainment rate above the national average. New York, Washington, D.C., and Los Angeles topped the list for the most tech degrees completed in a two-year period. When it comes to small markets, Columbus was the standout in this area, besting large markets like Dallas/Ft. Worth and Philadelphia in the number of tech degrees completed in the last two years. These numbers are an indication of future tech talent growth.
- Millennials: The presence of millennials in the workforce has contributed to the growth of tech talent labor pools. In Boston, millennials make up more than 25 percent of the total population. In Washington, D.C., the millennial population has increased by 26.5 percent since 2009.
“Though highly concentrated within the high-tech services industry, tech talent is not limited to any one type of company and can be found across all industry sectors. In fact, more than 60 percent of tech talent jobs are located outside of the core high-tech industry and these workers help generate innovation and advances that can boost the whole economy, including the commercial real estate market,” said Yasukochi.
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 2014 revenue). The Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 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.