Tech employment growth is still helping spur office rent growth in major tech markets, but rents also are rising in smaller tech markets where employers now are seeking new talent. That is one of the conclusions of the latest CBRE Scoring Tech Talent report, which the real estate giant publishes annually.
Office rents are highest in New York, the San Francisco Bay Area, Washington, D.C., Los Angeles and Miami, but rents are growing the most (over the last five years) mostly in smaller tech markets. Orange County experienced the most growth in office rents during that period, with direct asking rents up 50%, according to the report.
Next in rental growth are Portland, Oregon (up 44%), Nashville, Tennessee (up 41%), the Bay Area (up 40%) and Charlotte, North Carolina (up 40%).
Tech is driving much of that growth, with an outsized impact on office markets because the industry accounts for more leasing than any other. In Q1, for instance, 20% of major office-leasing activity involved a tech tenant, the report says.
Tech growth is driving demand for office space in secondary markets, just as it has in primary markets in recent years. As tech talent in major tech markets is in shorter supply than ever, tech companies are looking to hire in new tech markets, according to CBRE.
Most of the tech jobs are still in major markets, such as the Bay Area, Toronto and New York City, the report says.
But the quest for tech talent is stronger than ever in such markets as Tucson, Arizona, with a 90% increase in tech jobs over five years; Hamilton, Ontario, with a 52% gain; Waterloo, Ontario, with a 40% gain; and Las Vegas, which has seen a 35% gain in tech jobs.