Rising high-tech employment has helped fuel double-digit rent growth in 10 U.S. tech-dominated submarkets, according to the latest research from CBRE Group, Inc. These submarkets, located within major tech-oriented cities, including San Francisco, Austin, New York City and Silicon Valley, posted rent growth of at least 10% over the past two years, contributing to the gradual recovery of the U.S. office market.
The relationship between high-tech job growth and accelerating rents was especially pronounced in SOMA in San Francisco, where rents have increased 51% over the past two years, Redwood City in San Francisco Peninsula (up 45%), Midtown South in New York City (up 44%) and Mountain View in Silicon Valley (up 42%).
“High-tech industry job growth accelerated over the past year and fanned out to cities across the U.S. to tap into top tech-talent markets. This intensification of growth and clustering in top-tech submarkets caused a sharp rise in office rents,” said Colin Yasukochi, Director of Research and Analysis for CBRE Global Research and Consulting.
According to the report, U.S. Tech-Twenty: Measuring Office Market Impact, which tracks high-tech employment and office market conditions in 20 tech-oriented office markets across the U.S., high-tech employment growth in the services sector has accounted for one of every four new office-using jobs since 2010. Collectively, high-tech services jobs in all Tech-Twenty markets grew 15.2% between 2010 and 2012 compared with 9.3% collective growth in the prior two-year period (2009 to 2011). Sixteen markets saw accelerated job growth during this same comparison period, led by San Francisco, Austin, Chicago, and Los Angeles.
Other highlights of the report include:
- The rent premium commanded by submarkets with heavy high-tech employment is increasing. The differential between these submarkets and the Tech-Twenty office markets as a whole has grown to 18.1%, compared to 2.2% two years ago.
- When deciding where to locate a high-tech oriented business or pick property investments, location is increasingly important. Clustering of tech oriented talent drives both demand for office space and underlying property performance.
- Emerging and high potential markets represent opportunity for both occupiers and investors. Atlanta, Chicago, Los Angeles and Baltimore have moved significantly toward growth leadership and their office markets are showing stronger performance.
To view the full report click HERE.
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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 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 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.