A new CBRE report ranks Seattle the sixth fastest growing tech market with overall office rent growth of 12.4 percent between Q2 2017 and Q2 2019, up from 11.7 percent in the previous two-year period. The company’s annual Tech-30 report measures the tech industry’s impact on office rents in the 30 leading technology markets in the U.S. and Canada.
Seattle also saw the fourth highest high-tech employment growth rate with 23.7 percent during 2017 and 2018. This accounted for more than 34,000 new tech jobs, which was the highest number of jobs added in any of the Tech-30 markets. In addition, technical occupations across all industries in Seattle grew 24.3 percent over the past five years, while the number of local tech grads grew more than 60 percent further deepening the already strong tech talent labor pool. Major technology companies have leased nearly 2.8 million sq. ft. in the in past year, accounting for 45% of all leasing activity in the Puget Sound market. Much of this space is for expansion purposes, which will add even more jobs to the tech industry in the near-term. In the region’s core submarkets, limited new development has pushed vacancy to 8.4% in Seattle’s CBD, 3.2% in Lake Union and 4.8% in Bellevue’s CBD – all-time lows.
“Seattle’s tech industry is among the largest in North America and is growing at a rapid pace ,” said CBRE’s John Miller, senior managing director of the firm’s Seattle office. “This growth, combined with the second strongest tech labor pool in North America, means we’re going to continue to attract tech firms looking to take advantage of our intellectual capital, which will continue to strengthen office fundamentals.”
Office-rent growth has been strong for the Tech-30 in the past two years, with 10 markets posting double-digit percentage growth in average rents over this period, led by San Francisco. Overall, rents increased in 28 of the Tech-30 markets since 2017.
Top Tech-30 Markets For Two-Year Office Rent Growth Rate
CBRE’s report also examines rent gains, rent premiums and net absorption in submarkets that have emerged as tech hot spots within their larger market areas. Lake Union showed a 6.4 percent rent growth in the past two years and commands a 13.4% premium over the overall market average. Net absorption in the submarket came in at 8.8 percent versus the city’s overall net absorption rate of 5.3 percent between Q3 2017 and Q3 2019 (#9 among Tech-30 markets). Nationally leading tech submarkets, including Lake Union, registered an office-rent premium of 14 percent in comparison with the average in their respective cities.
“The North American tech industry has diversified its economic base as it has grown, expanding its presence in many Tech-30 markets,” said Colin Yasukochi, Executive Director for research for CBRE’s Tech and Media Insights Center and co-author of the report. “Meanwhile, large tech companies have been an ongoing source of demand; The 10 most active tech companies leasing office space since 2013 account for 27 percent of overall tech-industry leasing.”
To read the full report, click here.
CBRE Group, Inc. (NYSE:CBRE), 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 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 480 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.
