IRVINE, CA—Although Northern California is the cradle for the technology industry, Silicon Valley has matured beyond the garages from which it was born, and Orange County is also in the midst of a tech boom. According to JLL's 2015 United States Technology Office Outlook, technology firms and startups aren't just exploring new U.S. markets, they're starting to plant roots, and Orange County has one of the fastest growing tech markets in the nation.

· Based on a rolling 12 months, Orange County technology firms attracted a total of $586.97 million of venture capital funding, up 63.5 % from the previous 12 months.

· In the JLL locator matrix Orange County ranked in the "High startup opportunity, low cost" category, which is the sweet spot for young companies. This matrix is based on startup momentum, tech real estate, employment costs and other key factors.

· Orange County's economy is growing faster than the nation's economy.

· Tech firms in Orange County have a large labor pool with a highly educated and talented workforce.

Over the past year, 73% of the tech 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. Expansion for the technology industry in 2015 is no longer just about the convenience of cheaper rents or accessing new talent pools. It's a strategic necessity.

"Technology companies and startups need to look at a full range of options as part of their location strategy," said Steffen Kammerer, leader of JLL's Technology Practice group. "These companies have to grow. They can still hold a headquarters in the Bay Area, but their offices in secondary or tertiary markets can sometimes support larger staffs or hold just as much strategic importance to their business plans. We're seeing this now more than ever."

Fortunately, according to JLL's report, the same economic forces that are pushing rents higher along familiar Northern California streets like Sand Hill Road and Hamilton Avenue—which at $141.60 and $124.44 per square foot respectably are the most expensive in the United States—are making it possible for the sector to spread the wealth into markets like Atlanta, Detroit, Orlando and Phoenix. In the past year, 34 technology companies expanded into new locations across 19 markets with more than 2.1 million square feet of office space.

"Other markets are not competing against Silicon Valley. They're competing to be more like Silicon Valley," said Julia Georgules, director of U.S. Office Research for JLL. "Technology has become so pervasive in business that it's now becoming a part of every industry and every market. This is generating a new momentum and energy in smaller markets and making them attractive to the type of talent that the technology industry is recruiting. It's not necessary to be located in San Francisco or Silicon Valley anymore as a result, although you'll still find great opportunity in those markets."

Venture capitalists are even casting a wider net across the United States. Last year, 75.8% of unicorn companies were located in San Francisco and Silicon Valley; however, that number has shrunk to 59.2% with a remaining share in Utah, Oakland-East Bay, Boston, Washington, D.C. and Orange County.

Not all locations are equal, however, particularly for young startups and small-to-mid sized technology firms. JLL evaluated the key factors, including market startup opportunity and cost, to develop a proprietary Locator Matrix to determine which locations currently offer the right fit for these companies.

"The definition of opportunity or what determines a 'sweet spot' market is constantly evolving, and the time to capitalize on those opportunities isn't infinite," said Amber Schiada, director of research for Northern California and Rocky Mountain region. "Startups are now competing with other industries for talent and creative space that will push rents at a faster rate over the next 12-18 months. That's why we developed this matrix, so that these companies could quickly and easily examine a full range of factors when selecting their next location."
The report helps technology companies make informed expansion decisions and provides insight for investors looking to find the next high-tech growth opportunity. JLL's research ranks 37 U.S. markets by potential investment opportunity and by the best location for continued expansion with our proprietary Locator Matrix.

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