SAN FRANCISCO-New tech-oriented submarkets around the U.S. and Canada have been created by strong growth in high-tech sector hiring and increasing competition among firms for talent, says a newly released high-tech-industry report from Jones Lang LaSalle. The firm estimates that high tech accounts for nearly one-third of recent office-market absorption nationwide, and the top five markets—Boston, New York, Silicon Valley, San Francisco and Seattle—recorded annual rent growth across key tech-oriented submarkets of between 16.8% and 57.9% in the first quarter.

“Despite high-tech’s relatively small footprint in office markets, accounting just 8.5% of all jobs using office space, it has had a tremendous impact on the absorption of office space in the top five tech-oriented markets,” says Colin Yasukochi, northwest director of research for JLL. “Additionally, the sector’s recent employment growth—roughly three times the overall US employment rate—has begun to affect a growing number of other markets around the US and Canada.”

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As GlobeSt.com previously reported, San Francisco was found to be a top-performing office market in first-quarter 2012—followed by New York City and Houston—with rental rates increasing by 7.5% over fourth-quarter 2011. Demand and rent growth here were found to be driven largely by technology growth—specifically, social media, search engine and cloud computing companies such as Twitter, Zynga, Salesforce, Yelp, Google and LinkedIn, Yasukochi told GlobeSt.com at the time.

Submarkets that saw positive annual rent growth during the first quarter include Vancouver’s Yaletown submarket; Boulder, CO; downtown Pittsburgh; Washington, D.C.’s East End; and the West Loop submarket of Houston, the report indicates. High-tech demand for office space, which has led to rent recovery in many markets adversely affected by the financial downturn, is now spurring construction activity in the office sector for the first time in more than five years.

“We’re now seeing strong evidence of the ‘high-tech effect’ spreading out beyond the five major markets as companies in the technology sector both expand their business models and engage in a vigorous battle to land new pools of talent,” Yasukochi says. “This quest for more human capital is increasingly pushing firms to look outside traditional tech cities to set up new operations.”

In markets such as San Francisco, where high-tech demand is intense and tenants have been snapping up creatively configured office environments, there are very few large blocks of space available to accommodate additional growth, Yasukochi adds. “With rents rising, we are now at the point where new construction—for those with access to capital to build—is coming to the drawing board.”

For example, industry sources say Tishman Speyer is planning to build a 286,000-square-foot speculative office tower here in SoMa’s Foundry Square, the first such development in the city since 2006, and may start work early next year on 222 Second St., which has been approved for a 27-story, 450,000-square-foot tower.

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Carrie Rossenfeld

Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.

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