New report from CBRE Group, Inc. finds Pittsburgh's Oakland submarket an attractive destination for tech tenants
Pittsburgh, September 3, 2015 – Businesses looking for office space in the nation’s hottest tech markets should expect to pay a premium – and a hefty one in many of the top tech cities, according to a new research report by CBRE Group, Inc. The report, which analyzes the top 30 tech cities across the U.S. and Canada, showed an aggregate rent premium of 11 percent across all 30 markets—a number that jumps significantly higher in the hottest tech submarkets, including East Cambridge (Boston) at 87 percent, Santa Monica (Los Angeles) at 85 percent, and Mountain View (Silicon Valley) at 73 percent.
Pittsburgh’s most established tech submarket – Oakland--continues to lead the way in rent growth in the Pittsburgh region, due primarily to their heavy concentration in tech workers, an industry that traditionally demands higher office rents. Oakland has the 16th highest rent growth of any submarket in North America. While net absorption in the Pittsburgh office market shows significant room for improvement, the rising rents indicate an ongoing positive outlook for the city and region.
Several key developments are driving the tech boom in Pittsburgh. While Oakland remains the primary tech hotbed neighborhood in Pittsburgh, the center of the tech market is expanding, with neighborhoods like the East End, Lawrenceville, the Strip District, the CBD, the North Side, and the South Side all experiencing an increase in concentrations of tech users.
“The tech industry growth in Pittsburgh has been one of most important factors in diversifying Pittsburgh’s economy, a much needed transition given our historic reliance on energy and manufacturing,” said Jeffrey Ackerman, Managing Director of CBRE’s Pittsburgh office. “Much of this tech focus is driven by both the education and healthcare sectors. But we’ve also seen creative partnerships driving growth, such as the one between Uber and Carnegie Mellon University to create the Uber Advanced Technologies Center. Pittsburgh is increasingly becoming an important city in the tech universe, and that bodes extremely well for our ongoing economic recovery.”
Software/Services Job Growth
Ranked by growth rate, 2012 to 2014
2012 to 2014 Growth Rate
2011 to 2013 Growth Rate
Salt Lake City
Market Rent Growth
Ranked by growth rate, Q2 2013 to Q2 2015
Q2 ’13 to Q2 ’15 Growth Rate
Q2 ’12 to Q2 ’14 Growth Rate
San Francisco Peninsula
Source: U.S. Bureau of Labor Statistics, Statistics Canada and
CBRE Research, July 2015.
high-tech software/services industry has created 730,000 new jobs since 2009
and was the leading driver of U.S. office market demand, accounting for 20
percent of major leasing activity, through Q2 2015. In many leading tech
markets, the sector is even more dominant: in Silicon Valley, Austin, San Francisco
and Seattle, high-tech companies accounted for 88 percent, 63 percent, 62
percent and 60 percent of major leasing activity through Q2 2015, respectively.
“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,” said Colin
Yasukochi, director of research and analysis for CBRE.
“Commercial real estate investors must be mindful and have realistic expectations
about this historically volatile industry underpinning the health of many ‘Tech-Thirty’
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 2014 revenue). The Company has more
than 52,000 employees (excluding affiliates), and serves real estate owners,
investors and occupiers through more than 370 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.