This put Austin second to Silicon Valley for growth in occupied office space
AUSTIN, Texas – November 28, 2016 – Austin held steady at number three on CBRE’s annual Tech-Thirty list, which analyzes the 30 leading technology markets in the U.S. and Canada in terms of high-tech software/services job growth. Austin saw its high-tech jobs grow 33.3 percent from 2013 to 2015, evenly paced with 33.4 percent growth from 2012 to 2014 and above the national annual average of 7.3 percent growth seen over the last five years for this sector.
Austin scored even higher in the rankings for its two-year office net absorption or occupancy growth from Q3 2014 to Q2 2016. The 4.1 million square feet of net absorption in that period, representing 8.4 percent of inventory, ranked Austin number two.
Erin Morales, Senior Vice President, CBRE, Technology & Media Practice said, “Austin is approaching a maturity level in this cycle, though our record absorption levels indicate rental rates will likely continue to climb. Mature tech companies continue to cluster in the Northwest submarket, which has a lot going for it—extensive development in The Domain offers new amenities to support talent recruitment and retention, while residential development is booming in the surrounding suburbs.”
Tech-related office leasing accounted for 20 percent of all office leasing in the U.S. in the first half of 2016, up from 18 percent in 2015, despite an overall slowing in tech job creation.
Office Rents in the Tech-Thirty
CBRE’s report showed that many of the hottest tech submarkets, where tech job creation continues to boom, are significantly outperforming their overall markets in terms of leasing activity and rent premiums, fueled primarily by the demand for highly-skilled tech talent. The Northwest Austin market, the city’s main technology submarket, is outpacing the overall market for rent growth as it played catch-up with citywide asking rents. From Q2 2014 to Q2 2016, average office rents in Northwest Austin rose 15.8 percent to $32.99, compared to 15.3 percent to $33.22 for the overall market over the same time period. For comparison, Austin office rents grew 11.42 percent from Q2 2013 to Q2 2015.
Job Growth in the Tech-Thirty
CBRE also analyzed the Tech-Thirty markets according to high-tech industry job growth. San Francisco topped the rankings for the fifth consecutive year with 47.0 percent growth in its high-tech job base between 2013 and 2015. Eighteen markets outperformed the U.S. average of 13.7 percent job growth in high-tech software/services, with Phoenix (44.5 percent), Austin (33.3 percent), Charlotte (33.2 percent), and Indianapolis (27.9 percent) rounding out the top five.
“Advanced technology has integrated itself into business productivity and although the talent pool is limited, strong demand for technology services from both businesses and consumers is expected to support hiring by high-tech firms. The skills of the available labor pool do not appear to align with available jobs, causing a structural barrier to growth,” said
Colin Yasukochi, director of research and analysis, CBRE. “This demand for technology should support growth among high-tech companies and high-tech office market clusters.”
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 (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
