Tech-Thirty 2015

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HOW WELL IS THE TECH IN​DUSTRY PERFORMING?

The high-tech software/services industry created 730,000 new jobs at a growth rate of 34% since 2009—one-fifth of all new office-using jobs. The sector was also the leading driver of U.S. office market demand, accounting for 20% of major leasing activity in 2015.

WHAT IS THE TOP-RANKED​​ TECH-THIRTY CITY?

San Francisco topped the Tech-Thirty office markets list for four straight years; its high-tech job base (43%) and office rents (31%) grew at the fastest rate over the past two years. Phoenix shared the top high-tech job growth rate of 43% with San Francisco, but created 4,300 fewer new jobs.

WHERE TO FIND HIGH-TECH INDUST​RY MOMENTUM MARKETS?

Twenty-four markets exceeded the U.S. high-tech software/services job growth rate of 5.7% between 2012 and 2014, with Austin (33%), Silicon Valley (27%) and Nashville (23%) joining San Francisco and Phoenix to round out the top five.

WHICH CITIES LEAD THE​ TECH-THIRTY OFFICE MAR​KETS?

Sixteen markets posted double-digit rent growth over the past two years, led by San Francisco (31%), Silicon Valley (28%), Raleigh-Durham (23%), San Francisco Peninsula (21%) and Vancouver (18%).

WHERE ARE THE RENT PREMIUM​S/DISCOUNTS?

The strong performance of high-tech submarkets led to substantial rent premiums over the entire Tech-Thirty office market—the aggregate premium was 11%. Within markets, premiums were as high as 87% in East Cambridge, 85% in Santa Monica and 73% in Mountain View. Discounts were also available in a number of emerging tech submarkets, including Reston/Herndon (-23%), St. Louis CBD (-17%) and Northeast Charlotte (-12%).

WHERE T​O INVEST?

From an investor’s perspective, Austin, Salt Lake City, Phoenix and Portland offer further growth potential. These markets are also attractive to occupiers, although Raleigh-Durham, Dallas/Ft. Worth, Charlotte and Nashville offer the best combination of low office rents and a growing high-tech labor pool.

HOW LONG WILL THE IND​USTRY STAY STRONG?

The high-tech industry is directly supported by consumer demand and a growing number of high-tech integrated businesses, which should keep the industry strong in the years ahead and provide further support for office markets in the Tech-Thirty. Commercial real estate investors must be mindful and have realistic expectations about this historically volatile industry underpinning the health of many Tech-Thirty office markets.


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