Columbus benefits from a low cost of living, increased funding in STEM industries, and the stream of talent produced by Ohio State University
Los Angeles, July 6, 2016 – Coming in at #23, Columbus is the highest-scoring small market* on CBRE Group, Inc.’s annual “Scoring Tech Talent,” research report which ranks 50 U.S. and Canadian markets according to their ability to attract and grow tech talent. While larger, more established tech markets like San Francisco Bay Area, Washington, D.C., and Seattle continue to dominate the top spots on the Tech Talent Scorecard, Columbus benefitted from its low cost of living – the second lowest in the nation according to the CBRE report – as more highly skilled tech workers, especially millennials, flock to more affordable markets with a growing tech presence.
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. In addition to its lower costs, Columbus also benefitted from increased funding in STEM industries and the stream of talent produced by Ohio State University, the CBRE report said.
“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, including Columbus, in our ranking this year.”
“The ranking comes as no surprise. Columbus has the right mix of ingredients that attract tech talent as well as retain the talent that is being produced by our local universities,” said Michael Copella, managing director of CBRE’s Columbus office. “Columbus is in the middle of a renaissance and our growing pool of tech talent is one of the foundations for an exciting future.”
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. Columbus was the ninth-ranked market in terms of the number of tech degrees completed, behind New York, Washington, D.C., Los Angeles, Chicago, Phoenix, Boston, the San Francisco Bay Area, and Atlanta, and ahead of Detroit. Columbus produced 20,995 tech graduates between 2010 and 2014 and added 24,310 tech jobs between 2011 and 2015, for a net gain of 3,315.
- 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, Columbus has benefited from affordability with a wage-to-apartment rent ratio of only 12.2 percent, making it the second-most affordable of all 50 markets examined in the CBRE report, just behind Oklahoma City, which had a ratio of 12 percent.
- Presence of Millennials: The presence of higher educational institutions help markets to attract high concentrations of millennials. Columbus has seen its population of 20-something millennials grow by 17,000 (10.9 percent) since 2009, the fourth most among small markets (those with a tech labor pool of fewer than 50,000), behind Salt Lake City, Richmond, and Charlotte. That’s 27 percent of total growth in a population of 836,000.
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.”
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.
Although Columbus’ office asking rents have increased 15 percent to $18.81 per sq. ft. from Q1 2011 through Q1 2016, the market is still affordable, with the 13th-lowest office asking rents of the 50 markets in the CBRE study. Columbus’ office vacancy rate dropped 580 basis points to 14 percent over the same period.
Tech Talent Scorecard
Established tech markets, namely 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 where Phoenix, Toronto, Chicago, Orange County and Minneapolis.
To view the full report, please click here.
* The CBRE report defines small markets as those with a tech labor pool of less 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.