After the June 2007 introduction of the iPhone, software developers soaked up much of the venture capital funding as a rush began to design the next hot app. But after nine years, this type of software development has hit a lull. And Schiada says the next wave of high-tech development could come from innovations in hardware such as self-driving cars or virtual reality tools.

This lull, however, is highly unlikely to dislodge high-tech from the key role it plays in the US office market. When JLL researchers examined all US leases of 20,000 square feet or more over the past two years, they found 63% of the tech leases involved expansions, compared to about 48% of leases overall.

“We expect venture capital funding to continue at its current pace,” says Steffen Kammerer, senior vice president and leader of JLL's technology group. That funding will, however, be accompanied by more scrutiny, making tech companies more inclined to expand at modest rates.

“Tech is not going anywhere,” says Schiada.

CHICAGO—High-tech office users justifiably get a lot of attention from both owners and investors. As recently reported in GlobeSt.com, the sector drove roughly 25% of the leasing activity in the top US metro areas over the past two years. But after several years of intense activity, the sky-high sector is coming back down to earth.

“Between 2012 and 2014, a lot of start-ups, such as Uber, were exploding into these huge companies, but over the past year the tech sector has flattened a bit,” JLL's Amber Schiada, vice president, director of research, Northern California, tells GlobeSt.com. The Chicago-based firm recently released its latest Tech Office Outlook report, which notes a 9.6% dip in second quarter leasing activity from tech users.

“Venture capital firms have started to scrutinize their companies more,” she explains, and are now more likely to question the need to hire additional people or expand the amount of occupied space. But instead of looking at this as a concern, this cautious attitude “is a good thing for the industry. It was getting overheated.”

Interest in tech among venture capital firms remains intense, she adds. “And they are still flush with cash.” But before distributing those funds, the venture capitalists also need to discover “what's going to be the next great innovation.”

After the June 2007 introduction of the iPhone, software developers soaked up much of the venture capital funding as a rush began to design the next hot app. But after nine years, this type of software development has hit a lull. And Schiada says the next wave of high-tech development could come from innovations in hardware such as self-driving cars or virtual reality tools.

This lull, however, is highly unlikely to dislodge high-tech from the key role it plays in the US office market. When JLL researchers examined all US leases of 20,000 square feet or more over the past two years, they found 63% of the tech leases involved expansions, compared to about 48% of leases overall.

“We expect venture capital funding to continue at its current pace,” says Steffen Kammerer, senior vice president and leader of JLL's technology group. That funding will, however, be accompanied by more scrutiny, making tech companies more inclined to expand at modest rates.

“Tech is not going anywhere,” says Schiada.