Press Release

Seattle Leads North America's Tech Industry Job Growth According to CBRE's Tech-30 Report

29 11 2018

2018-Tech-30-Report-CBRE-Research

Technology companies based in Seattle and other top tech headquarters markets, like the San Francisco Bay Area, New York and Boston, are expanding into new markets, creating more demand for office space and driving office rent growth in the beneficiary markets, according to CBRE’s annual Tech-30 report, which measures the tech industry’s impact on office fundamentals in the 30 leading tech markets in the U.S. and Canada.

Together, tech firms headquartered in these four markets have taken more than 25 million sq. ft. of office space outside of their headquarters markets over the past five years. The top four tech headquarters markets are also feeding each other, with cross-market expansion between the San Francisco Bay Area, Seattle, Boston and New York accounting for approximately 14 million of the 25 million sq. ft. of migration.

Seattle-based tech companies have grown rapidly, expanding by as much as 9 million sq. ft. in Puget Sound alone over the past five years. The region is also a major beneficiary of San Francisco Bay Area tech firm expansion, which totaled 3.5 million sq. ft. over the same time period. This correlates with the growth of Seattle’s high-tech job base, which is up 26 percent over the past two years, ending San Francisco’s reign as the fastest high-tech job growth market for the first time in seven years. Accordingly, Seattle’s office rents are up 14 percent over the same two-year period (fourth most among the Tech-30), and net absorption is up 5.2 percent (eighth most among the Tech-30).

“Seattle is benefiting from the migration of large-scale tech users seeking alternative talent pools,” said Matt Walters, Senior Vice President in CBRE’s Seattle office. “Tech jobs added to the Seattle market show that it’s the preferred alternative for a lot of these expanding companies, thanks to the region’s deep talent pool, high quality of life and proximity to the San Francisco Bay Area, where many of these companies are based. In-migration of tech along with expanding local companies have increased the competition for the most attractive submarkets.”

“Demand is outpacing supply as top tech firms from all over the world want to have a presence in the Seattle region, and with vacancy rates in the low single digits, it will be increasingly challenging to find space, especially for large blocks that many of these firms are seeking, said Brian Biege, Senior Vice President in CBRE’s Bellevue office. “The big question we are solving for is ‘what will tenants do moving forward?’”

Impact of Tech Job Growth on Office Markets

The influence of tech job creation on office market growth is pervasive across the U.S. and Canada, with eight of the Tech-30 markets posting rent growth of 10 percent or more between Q2 2016 and Q2 2018. Office rents also increased in 26 of the 30 primary tech submarkets over the same period.

Top 10 Office Markets by Rent Growth

MARKET

RENT GROWTH RANK

RENT GROWTH RATE Q2‘16-Q2’18)

TECH JOB GROWTH RATE (% CHANGE ’16- ’17)

Atlanta

1

16.3%

10.7%

Los Angeles

2

15.8%

14.7%

Orange County

3

15.5%

14.5%

Seattle

4

13.9%

25.7%

Portland

5

13.8%

12.8%

Charlotte

6

13.7%

15.4%

Raleigh-Durham

7

12.8%

10.2%

Nashville

8

12.3%

12.3%

Denver

9

9.6%

12.5%

Washington, D.C.

9

9.6%

3.9%


“As space availability in top tech submarkets continues to tighten, we expect large tech companies to continue to expand outside their headquarters markets—including further into secondary and even tertiary markets. Large tech company expansion into smaller markets will help foster innovation clusters, further boosting job creation and creating additional office demand,” said
Colin Yasukochi, director of research and analysis for CBRE in the San Francisco Bay Area.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of 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.