HOUSTON - July 19, 2016 – Houston’s tech talent pool grew 47.4 percent between 2010 and 2015, according to 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.
“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 Houston, in our ranking this year.”
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: Of the top 50 tech talent markets, nearly 70 percent 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. Houston produced 12,063 tech graduates between 2010 and 2014 and added 32,960 tech jobs between 2011 and 2015, for a net gain of 20,897, good for fourth place on CBRE’s “brain gain” list, behind only the San Francisco Bay Area, DFW and Seattle.
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, Houston has benefited from affordability with a wage-to-apartment rent ratio of only 13.7 percent, making it a more affordable market to live in than Austin (15.7 percent) and DFW (16.1 percent).
Presence of millennials: The presence of higher educational institutions help markets to attract high concentrations of millennials. Houston has seen its population of 20-something millennials grow by 3.7 percent since 2009, which is above the US average of 3.1 percent.
Impact on Office Markets
“Houston’s diverse industry base includes leading energy, medical and financial institutions that have an intrinsic need for a highly technical support staff to support their daily operations,” Senior Vice President Rich Pancioli said. “When you factor this need in with the increasing trend of these same types of companies using colocation facilities for their data and connectivity needs, Houston’s required need for tech talent will continue to increase to meet the rigorous technical demands that are materializing in the city.”
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.
In Houston, the average office asking rent increased 22 percent to $28.24 from Q1 2011 to Q1 2016, and the vacancy rate decreased 170 basis points to 14.3 percent over the same period.
Tech Talent Scorecard
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. Houston was ranked #30 on the 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.
To view the full report, please click here.
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.
