LOS ANGELES-Those who follow @GlobeStcom on Twitter and @GlobeStLIVE may have seen a post teasing the announcement, but GlobeSt.com has learned that job growth in the high-tech sector is fueling strong rental rate growth and declining vacancies in tech-oriented office markets across the US. So says a recent report entitled “Tech-Twenty Office Markets,” put out by CBRE global research and consulting.
“The strengths of these tech-centric office submarkets, with strong rental rate growth and declining vacancies, are major factors supporting the overall office market recovery,” notes Colin Yasukochi, CBRE's director of research and analysis.
According to Yasukochi, “With the high-tech economy growing nearly six times faster than the national average, we expect that these submarkets will continue to outperform, helping to counterbalance tepid job growth in other sectors and the uncertain economic environment.”
Between 2009 and mid-2012, high-tech service jobs in the US grew by 9.9%, while non-farm jobs grew by 1.7%, according to the report. The strong job growth in the tech sector was most impactful in the San Francisco, New York City and Silicon Valley office markets.
More far reaching, according to the report, were the impacts felt in the top 20 tech-oriented office submarkets across the US, where 15 experienced increased rental rates over the past two years.
Rental growth was strongest in Silicon Valley’s Mountain View submarket, with 83% growth, followed by San Francisco’s SOMA submarket, at 59%; Boston’s East Cambridge submarket, at 28%; and New York City’s Midtown South, at 24%.
Cities to watch in terms of future office market potential, according to the report, include Salt Lake City, Denver and Portland.
Other report highlights include:
*High-tech growth cycle is still in early stages with further growth and business cycles ahead. “While economic worry has surfaced within high-tech, both consumers and venture capitalists have responded by focusing spending and funding on key high-tech areas that should fuel further growth,” says the report. The number of high-tech services jobs grew in 18 markets, with San Francisco, New York City and Silicon Valley growing by 41%, 22% and 18%, respectively, over the past two years.
*With limited job growth in other sectors, the high-tech services sector is driving the local economic and office market performance in these markets.
*Over the past two years, vacancy rates have fallen in 18 submarkets, including double-digit declines in the SOMA (San Francisco), Hillsboro (Portland), Redwood City (San Francisco), Northwest (Austin), Southvalley (Salt Lake City) and Lake Union (Seattle) submarkets.
*Ten submarkets saw overall demand for space—or net absorption as a percentage of building stock—grow by more than 10%, led by Lake Union (Seattle), with a 22% improvement, followed by Hillsboro (Portland), at 19%, and SOMA (San Francisco), at 11%.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
