Pittsburgh added 2,503 new high-tech jobs from 2013
to 2015, an 18.8 percent increase.
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.
CBRE’s report showed that the hottest tech
submarkets where tech job creation continues to boom—led by East Cambridge,
Palo Alto and Santa Monica—are significantly outperforming their overall
markets in terms of leasing activity and rent premiums, fueled primarily by the
demand for highly-skilled tech talent.
Office Rents in the Tech-Thirty
The CBRE report shows that office rents for the top submarket in each of the 30 markets analyzed increased in all but one submarket between Q2 2014 and Q2 2016. The highest rent growth in this period occurred in both established and up-and-coming tech submarkets, illustrating stiff competition among tenants to locate in areas rich in talent such as University City, Oakland/East End Pittsburgh, East Cambridge, Palo Alto and Tempe. Average office rents in Pittsburgh’s top tech market, Oakland/East End, grew 32 percent to $23.53 from Q2 2014 to Q2 2016, behind only Philadelphia’s University City (37.8 percent) in the CBRE report.
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; its high-tech job base has grown 47.0 percent between 2013 and 2015, while average asking rents increased by 22.7 percent from Q2 2014 and Q2 2016. 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. Pittsburgh saw its high-tech jobs grow 18.8 percent from 2013 to 2015.
Over the past five years, the software/services
industry created 780,000 new jobs at a 7.3 percent growth rate and accounted
for nearly 20 percent of major leasing activity. In H1 2016, tighter labor and
volatile capital market conditions led to job creation slowing to a 4 percent
annual growth rate, which had a slight impact on certain office markets, like
Washington, D.C., New York and the San Francisco Bay Area.
“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.”
|
High-Tech Software/Services Job Growth |
Office Market Rent Growth |
||||
|
Rank |
Market |
2013-2015 |
Rank |
Market |
Q2 '14 vs. Q2 '16 |
|
1 |
San Francisco |
47.0% |
1 |
Silicon Valley |
28.4% |
|
2 |
Phoenix |
44.5% |
2 |
Raleigh-Durham |
24.6% |
|
3 |
Austin |
33.3% |
3 |
Orange County |
24.3% |
|
4 |
Charlotte |
33.2% |
4 |
San Francisco |
22.7% |
|
5 |
Indianapolis |
27.9% |
5 |
SF Peninsula |
19.8% |
|
6 |
Silicon Valley |
26.1% |
6 |
Nashville |
18.1% |
|
7 |
Toronto |
25.9% |
7 |
Dallas/Ft. Worth |
16.6% |
|
8 |
New York |
25.9% |
8 |
Austin |
15.3% |
|
9 |
Chicago |
21.1% |
9 |
Charlotte |
14.8% |
|
10 |
Dallas/Ft. Worth |
19.7% |
10 |
Portland |
14.2% |
|
11 |
Pittsburgh |
18.8% |
11 |
San Diego |
13.6% |
|
12 |
Seattle |
17.6% |
12 |
Boston |
12.7% |
|
13 |
Detroit |
17.1% |
13 |
Salt Lake City |
12.4% |
|
14 |
Vancouver |
16.8% |
14 |
Denver |
12.0% |
|
15 |
Raleigh-Durham |
16.3% |
15 |
New York |
11.6% |
|
16 |
Nashville |
16.2% |
16 |
Phoenix |
11.6% |
|
17 |
San Francisco Peninsula |
15.1% |
17 |
Atlanta |
11.4% |
|
18 |
Salt Lake City |
14.1% |
18 |
Los Angeles |
10.1% |
|
19 |
Orange county |
13.3% |
19 |
Minneapolis |
10.0% |
|
20 |
Los Angeles |
13.0% |
20 |
Vancouver |
9.0% |
|
21 |
Atlanta |
12.6% |
21 |
Pittsburgh |
7.3% |
|
22 |
Boston |
12.2% |
22 |
Chicago |
5.7% |
|
23 |
Portland |
12.1% |
23 |
Seattle |
5.2% |
|
24 |
Denver |
10.1% |
24 |
Indianapolis |
5.0% |
|
25 |
Minneapolis |
8.1% |
25 |
Philadelphia |
4.4% |
|
26 |
San Diego |
8.0% |
26 |
Detroit |
3.5% |
|
27 |
Baltimore |
4.5% |
27 |
St. Louis |
-0.3% |
|
28 |
Washington, D.C. |
3.9% |
28 |
Baltimore |
-0.5% |
|
29 |
St. Louis |
2.3% |
29 |
Toronto |
-1.2% |
|
30 |
Philadelphia |
2.3% |
30 |
Washington, D.C. |
-3.7% |
|
Source: U.S. Bureau of Labor Statistics, July 2016, Statistics Canada, August 2016, CBRE Research, Q2 2016. |
|||||
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.
