Chatham says firms having multi-market presence was previously an exception but is now the norm.
SAN FRANCISCO—This week, Cushman & Wakefield's research team released a new infographic, The Great Tech Migration, offering some data points on tech expansion, and highlighting which markets are booming tech hubs and why. Since January 2010, 58 of the 89 Bay Area-headquartered tech and life science companies (100,000 square feet or more) have taken 30.4 million square feet of office space in other US cities.
While the footprint has expanded nationally, growth has nonetheless continued in the Bay Area. The same tech and life science companies committed to 55 million square feet and now control more than 103 million square feet of office and R&D space.
"Expanding tech companies based in the San Francisco Bay Area are spreading far and wide across North America, not just in search of areas with less expensive cost of living and/or cost of doing business but equally if not more so, the crucial need for talent," says Robert Sammons, Cushman & Wakefield's senior director of research in Northern California. "That is among the key reasons we've seen such significant tech growth in markets such as New York, Washington, DC and Boston with the hunt for talent, as these jobs often require highly specialized skills. That said, many of these very same influential tech companies have also continued their growth within the Bay Area over the past decade, and at a rapid pace. It is no mystery that the Bay Area has been and likely will forever be the tech hub of the world."
Sammons says it is fascinating to see the changes in commercial real estate across the country and how technology and tech companies have quickly remade markets, not only in the Bay Area.
"As tech becomes more a part of every segment of every industry, it's the major markets and smaller ones too that are affected. In this review, we really wanted to study where Bay Area tech and life science companies were migrating and why," Sammons tells GlobeSt.com. "Certainly, some of the 'usual suspects' are on the Top 10 list but there are also a few markets that have flown under the radar such as Chicago and Dallas. And beyond the Top 10, there are others seeing activity as well. Such migration is definitely not all about cost, but where to find the talent."
Matt Chatham, who leads Cushman & Wakefield's tenant representation group in the Bay Area, says a company's determination for expansion and migration is a much more technical process than most may realize.
"Such critical decisions are made following extensive periods of deep analyses and due diligence, and so the migratory trends we see today are often actually the fruition of years of prior evaluation, whether examining site selection, labor and employee analytics, cost analysis and other important factors, including aligning with corporate growth projections and syncing with the market cycle," Chatham points out. "For companies today to be successful and perform at their optimal capability, they need to be able to attract the best and appropriately fitting talent, and so we are seeing more and more companies, namely tech-oriented, position themselves around such talent pools. Interestingly, what was once considered the exception as it pertains to companies having multi-market presence, is now considered the norm."
He goes on to say that multi-market growth and expansion have become far more commonplace than at any point before, particularly in the tech sector.
"There are numerous reasons for this, whether it be an operational/functional level, a cost level, a brand level, etc., but chief among them is constantly being proximate to talent," Chatham tells GlobeSt.com. "And although such outward migratory trends can sometimes give a sense of unease here at home, while expanding elsewhere at a rapid clip, tech growth is still far from over in the Bay Area, still the high-tech capital of the world, as evidenced by the enormous venture capital spending from seed funding through late stage."
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
