Jacksonville’s millennial population growth 11th-most among small markets in CBRE study
JACKSONVILLE, FL. – JULY 7, 2016 – San 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 like Jacksonville 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. Jacksonville’s population of 20-something millennials grew nearly 5 percent from 2009 to 2014, the 11th most among the small markets* in the CBRE study.“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.”
Jacksonville posted the fourth-largest increase in tech talent growth rate from 2013 to 2015, 18.8 percent, up 5.6 percentage points from 2011 to 2013, behind only Madison, Wisconsin, Toronto and Miami.
“Employment growth in tech occupations has a multiplier effect that spurs economic growth, which in turn drives demand for commercial real estate,” said Quinn Eddins, Director of Research & Analysis for CBRE Florida.
“Fortunately, Florida markets have some of the fastest-growing tech talent labor pools in the country. In Jacksonville, momentum in tech-related job growth has increased considerably over the last two years, even as such momentum has slowed in most other markets.”
Jacksonville also was the fifth-ranked market in terms of gender diversity in tech occupations, with women filling 29.1 percent of its tech roles, behind only Washington, D.C., Richmond, Sacramento and Baltimore.
Influential Factors Shaping Tech Markets Today
The CBRE report highlighted several influential factors shaping both large and small tech markets today.
• Educational Attainment/Tech Degrees: Nearly 70 percent of the top 50 tech talent markets have an educational attainment rate above the U.S. average (30 percent). More relevant to this study is the number of graduates who have earned technology degrees. The top 10 markets ranked by the number of tech degrees completed were New York, Washington, D.C., Los Angeles, Chicago, Phoenix, Boston, the San Francisco Bay Area, Atlanta, Columbus and Detroit. Jacksonville produced 2,665 tech graduates between 2010 and 2014 and added 2,950 tech jobs between 2011 and 2015, for a net gain of 285, good for 25th place on CBRE’s “brain gain or drain” list.
• Cost of Living: According to Moody’s Analytics, 36 of the top 50 tech talent markets have a cost of living above the U.S. national average. CBRE compared the average apartment rent to the average tech-worker wage in each market and found that even in the most expensive markets, tech wages are able to cover the high cost of living (using the affordability benchmark that allocates 30 percent of income to housing). That said, top momentum markets like Charlotte and Nashville, clearly benefited from affordability with wage-to-apartment rent ratios of only 13 percent and 17 percent respectively. Oklahoma City, #5 on the momentum market list, has a wage to apartment rent ratio of just 12 percent, making it the most affordable of all 50 markets examined in the CBRE report. Jacksonville has an apartment rent to tech wage ratio of 14.2 percent.
• Presence of millennials: The presence of higher educational institutions helps markets to attract high concentrations of millennials. Madison, Pittsburgh and Boston took the top spots, each boasting millennials as 25 percent or more of the total population. Six large tech markets increased their millennial population by more than 10 percent since 2009, with Washington, D.C. growing the fastest at 27.1 percent. During the same period, five of the smaller tech markets increased their millennial population by more than 10 percent with Salt Lake City and Richmond growing at significantly faster rates than the others. Jacksonville’s population of 20-something millennials grew by 6,500, or nearly 4.9 percent, since 2009. That’s 16 percent of the total growth in a population of 853,000.
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.”
Benefitting from growth in the tech sector, office asking rents have risen in Jacksonville 6.7 percent to $18.43 per sq. ft. from Q1 2011 through Q1 2016. Over the same period, the vacancy rate has dropped 540 basis points to 16.8 percent.
While the cost of office space has increased since 2011, Jacksonville still has a low cost of doing business, especially compared to the 50 markets included in the CBRE study. Jacksonville had the eighth-lowest costs in CBRE’s analysis of estimated one-year costs in terms of wage and rent obligation for a sample tech firm with 500 employees and 75,000 sq. ft. of office space, with an estimated total cost of $34.8 million.
While the cost of office space has increased since 2011, Jacksonville still has a low cost of doing business, especially compared to the 50 markets included in the CBRE study. Jacksonville had the eighth-lowest costs in CBRE’s analysis of estimated one-year costs in terms of wage and rent obligation for a sample tech firm with 500 employees and 75,000 sq. ft. of office space, with an estimated total cost of $34.8 million.
Tech Talent Scorecard
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. 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. 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.
The top 10-ranked cities on the Tech Talent Scorecard were all large markets 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 County and Minneapolis. Jacksonville was #47 on the scorecard.
To view the full report, please click here.
* The CBRE report defines small markets as those with a tech labor pool of fewer than 50,000.
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.
