Tech Companies Claim Big Share of Office Leasing in Q3
Tech leasing activity has increased 122% over Q1.
Tech companies accounted for nearly one-fourth of all US office-leasing activity in the second and third quarters, a big uptick from 2020 figures and a 122% increase over Q1.
CBRE’s annual Tech030 report notes that more than two thirds of the top 30 North American tech markets registered office-rent growth from the second quarter of 2019. And four markets—Seattle, Charlotte, Vancouver and Austin—posted double-digit percentage rent gains, while six markets posted gains in net absorption since before the pandemic. Those markets are Charlotte, Raleigh-Durham, Nashville, Salt Lake City, Indianapolis and Phoenix.
“Over the past year, the tech industry has proven to be a resilient industry that grew throughout the pandemic,” said Colin Yasukochi, Executive Director of CBRE’s Tech Insights Center. “Many tech companies are, like other industries, embracing hybrid work formats to provide their employees flexibility. But the industry also values the collaborative environment of the physical office and its role in bringing employees together to foster innovation.”
Tech grew by 219,000 jobs in the US since May 2020 and employment in the sector now exceeds pre-COVID levels by 3.3%. The top markets for tech-job growth in 2019 to 2020 are Toronto (a gain of 26 percent), Seattle (22 percent), Vancouver (21 percent), New York (18 percent) and Austin (16 percent), according to CBRE. Submarkets near universities have been most resilient and posted the largest rent premiums, led by East Cambridge, Palo Alto and Santa Monica.
Sublease space remains a challenge for tech and for office more broadly, with office space listed for sublease by tech companies doubling over last year’s first quarter to Q3 2021. However, CBRE experts say the total sublease space in the US likely hit its peak in the last quarter. Sublease availability index fell in August, though CBRE experts note that “sizeable” backlogs of space remain. Boston and Atlanta have posted the strongest comebacks, followed by Los Angeles.