Rising Rents Push Tech to Secondary Areas

PHOENIX—During the past year, 73% of the sector’s office leases represented occupancy growth. With Northern California holding nine of the top 15 most expensive in-demand technology submarkets—led by Downtown Palo Alto at $98.68 per square foot—tech firms are looking to other zip codes to fuel their future, according to JLL‘s 2015 Technology Office Outlook. Expansion for the technology industry in 2015 is no longer just about the convenience of cheaper rents or accessing new talent pools in an exploratory exercise. It’s a strategic necessity, with firms starting to plant roots,

Keith Lammersen, JLL broker, tells GlobeSt.com: “Of special note is that the average office rent in Phoenix’s most expensive tech submarket (Tempe, AZ) is 78.5% cheaper than Silicon Valley’s most expensive submarket (Menlo Park, CA) and 43% cheaper than Seattle-Bellevue’s Lake Union. That’s a major benefit for tech companies and a tremendous boon for Phoenix.”