San Diego Ranks #16 On CBRE's Annual 50-City Tech Talent Scorecard
San Diego Ranks #16 On CBRE's Annual 50-City Tech Talent Scorecard
July 6, 2016
San Diego’s tech labor pool jumps 47.2 percent over past five years
Los Angeles, July 6, 2016 – San Diego was ranked 16th on the Tech Talent Scorecard, part of CBRE Group, Inc.’s annual report, “Scoring Tech Talent,” which ranks 50 U.S. and Canadian markets according to their ability to attract and grow tech talent. San Diego’s strong ranking was aided by its 47.2 percent growth in tech talent over the past five years, as well as its 13.9 percent growth in 20-something millennials from 2009-2014, the third-largest millennial growth rate among large markets (those with tech labor pools greater than 50,000) in the CBRE report, behind only Washington, D.C. and the San Francisco Bay Area.
“Tech talent growth rates are the best indicator of labor pool momentum and it’s easily quantifiable to identify the markets where demand for tech workers has surged,” said Colin Yasukochi, who authored the report on behalf of CBRE Research. “Tech talent growth, primarily within the high-tech industry, has recently been the top driver of office leasing activity in the U.S.”
While well-established tech markets like the San Francisco Bay Area, Washington, D.C., and Seattle once again took the top spots on this year’s Tech Talent Scorecard, the report showed that competition for talent is getting tougher, as more highly skilled tech workers—especially millennials—flock to cities with a growing tech presence like San Diego. San Diego was categorized as a large tech talent market, with 67,590 workers.
“Tech talent markets share several distinct characteristics, including high concentrations of college educated workers, major universities producing tech graduates and large millennial populations,” said Yasukochi. “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.”
Benefitting from growth in the tech sector, office asking rents have risen in San Diego 23 percent to $32.22 per sq. ft. from Q1 2011 through Q1 2016, making San Diego the 10th most expensive office market in the CBRE study. Over the same period, San Diego’s vacancy rate has dropped five percentage points to 12.5 percent.
“The tech ecosystem in San Diego is strong and we are seeing a migration of tech firms from the Bay Area to San Diego,” said Andrew Ewald, vice president, who leads CBRE’s Tech and Media Practice in San Diego. “The cost of living and the competitive recruitment process in the Bay Area are factors that can hurt a tech company, especially an early stage one. As a result tech companies are very focused on San Diego. Coupled with San Diego’s extensive resources, large number of venture capitalists, quality of life and the powerful convergence between tech and life science companies, we expect San Diego will continue to grow and attract the talent these tech companies require.”
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. San Diego produced 15,665 tech graduates between 2010 and 2014 and added 21,670 tech jobs between 2011 and 2015, for a net gain of 6,005, good for 14th 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. San Diego had the ninth-highest apartment rent to tech wage ratio, at 22.4 percent.
• Presence of millennials: The presence of higher educational institutions help 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. San Diego ranked third among large tech talent markets for millennial population growth. The population of millennials in their 20s grew by 32,900 (13.9 percent) between 2009 and 2014. That is 44 percent of total growth in a population of nearly 1.4 million. Six large tech markets increased their millennial population by more than 10 percent since 2009, with Washington, D.C. growing the fastest at 25.8 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.
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.
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.
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.