SAN DIEGO—Tech talent clustering is a growing driver of demand for office space in both large and small markets across the US, according to a new CBRE Research report.
Scoring Tech Talent which ranks 50 U.S. markets according to their ability to attract and grow tech talent. San Diego ranks at number 17 in the report and has a 10.8% growth rate in millennial population from 2010-2013, which is the fourth highest rate in the country.
While established tech markets like San Francisco, Washington, D.C. and Seattle dominated the top spots on the “Tech Talent Scorecard,” many smaller, up-and-coming markets stood out as top “momentum markets” based on tech talent growth rates. Oklahoma City and Nashville had a tech talent growth rate of 39% between 2010 and 2013, higher than Seattle (38%) and just below that of San Francisco (44%) and Baltimore (42 %). Portland, OR, and Charlotte both saw tech talent growth rates of 28%, outpacing well-known tech markets like Austin (26.5%), Silicon Valley (20.8%) and Los Angeles (13.6%). San Diego's talent growth rate from 2010-2013 was 31.2%, putting it in the top ten largest markets for tech talent growth.
“Tech talent growth rates are the best indicator of labor pool momentum and it's easily quantifiable to identify the markets where demand for tech workers has surged,” said Colin Yasukochi, director research and analysis for CBRE. “Tech talent growth, primarily within the high-tech industry, has recently been the top driver of office leasing activity in the US.”
Though tech talent comprises only 3.4% of the total U.S. workforce (4.4 million workers), the high-tech industry accounted for more major U.S. office leasing activity than any sector in both 2013 (13.6%) and 2014 (19 %), according to the CBRE report. San Diego's office vacancy rate for Q4 2014 was 13%, placing it in the top 20 lowest rates in the country. The annual office gross rents were $28.60 which is the eleventh highest office asking rent by market.
“For the past two years, the high-tech industry has not only spurred the economy as a whole, but it has been the top driver of commercial office activity, influencing rents and vacancy in major markets across the U.S., including San Diego,” said Andrew Ewald, vice president, who leads CBRE's Tech and Media Practice in San Diego. “Tech companies continue to outpace all other industries in San Diego. In the last 12 months we have seen a spike in venture capital spending which is increasing the demand for office space for tech companies.”
The top 10 large markets on the Tech Talent Score Card (identified as markets with a talent pool above 50,000 tech professionals) were:
| 1. Silicon Valley, CA |
| 2. Washington, D.C. |
| 3. San Francisco, CA |
| 4. San Francisco Peninsula, CA |
| 5. New York, NY |
| 6. Seattle, WA |
| 7. Boston, MA |
| 8. Baltimore, MD |
| 9. Austin, TX |
| 10. Atlanta, GA |
Dallas, Orange County, Chicago and Raleigh-Durham took the 11, 12, 13 and 14 spots on the list, before a small market—defined as a market with a tech talent labor pool of less than 50,000—made its way onto the list. The top ranked small markets included:
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