IRVINE, CA—Access to skilled labor is a fundamental need for scaling tech companies, so with Orange County's 3.3% unemployment rate, you could say the increase in STEM graduates is filling a much-needed gap, JLL VP Scott Wetzel tells GlobeSt.com. According to a recent report from the firm, 862,800 people 25 or older in the Orange County workforce hold a bachelor's degree or higher as of 2016; in 2011, that number was 736,347.

The report also showed that 211,704 people 25 or older in the Orange County workforce have degrees in a STEM-related field; five years ago, that number was 185,847. In addition, the average wage for computer and math occupations in Orange County has risen from $84,540 in 2011 to $94,780, and the average wage for all occupations in OC has risen from $50,960 in 2011 to $55,890. Meanwhile, the average wage for computer and math occupations in the US has risen from $78,730 in 2011 to $87,880, and the average wage for all occupations in the US has risen from $45,230 in 2011 to $49,630.

We spoke with Wetzel about the increase in STEM graduates and wages and how it translates to the real estate market.

GlobeSt.com: How are increases in STEM graduates and wages affecting Orange County's workforce?

Wetzel: In many ways, the question should be reversed—how are Orange County businesses affected by the local workforce? Access to skilled labor is a fundamental need for scaling tech companies, so with Orange County's 3.3% unemployment rate, you could say the increase in STEM graduates is filling a much-needed gap. That said, the increase of graduates only scratches the surface of satiating growing businesses' needs. As such, I anticipate that wages will continue to grow as the battle for talent persists. To win this battle, companies are also looking beyond wages to tangible and intangible benefits that resonate with the workforce they are targeting.

GlobeSt.com: How is the region's office real estate sector ultimately affected by this increase?

Wetzel: Of the 10 largest leases signed year-to-date, six are for tech or tech-related companies. This constitutes 1.2 million square feet of the 1.7 million square feet (i.e., 71%) of leases signed in 2017. On a more human level, this translates to approximately 5,000 jobs.

Orange County's office market is continuing its bull run, a run that benefits both landlords and tenants. Landlords are benefitting from increased rental rates, which also means higher exit prices for sellers. By example, average per-square-foot pricing just reached $286, surpassing the previous historical peak of $282. On the flip side, landlords aren't able to solely enjoy increased rents based on market dynamics, so they have heavily invested—and reinvested—in their projects to bring Bay Area-type amenities to Orange County.

Tenants are reaping the benefits of increased concession packages for new leases, allowing them to improve their office space and attract and retain key talent. Tech companies are also more likely to be drawn to well-amenitized projects—whether vertical campuses such as Cylance at 400 Spectrum with adjacent Spectrum Entertainment Center or more prototypical low and mid-rise campuses like Incipio at Park Place.

GlobeSt.com: Does this translate to other areas of real estate (i.e., multifamily and residential), and if so, how?

Wetzel: There are 9,604 multifamily units currently under construction in the county. Growing technology companies are reaching beyond Orange County to satisfy their talent needs, which is one of the many contributing factors to OC's housing markets.

GlobeSt.com: What else should our readers take away from your tech report about Orange County?

Wetzel: The OC/L.A. market is at the forefront of tech ecosystems in the country: number-one for absolute gain in tech employees in 2016; number-three for the total number of employees, behind only New York and Washington, DC; number-eight for overall rank and weighted market score.

Orange County's growing tech ecosystem continues to push the market as an emerging tech hub. The highly skilled and educated workforce is a major driver that attracts mature and startup companies, along with strong cost savings of real estate and company expenses compared to other West Coast markets. Centrally located firms in Orange County draw employees from Los Angeles, San Diego, Riverside and San Bernardino counties. While an emerging tech market, Orange County's tech roots run deep, with companies such as Broadcom and Blizzard that have a long-standing history in the market and account for numerous spinoffs. These factors have enabled Orange County to become a pivotal market for the gaming, software, cybersecurity and engineering sectors. The abundant number of amenities provides a high quality of life for young professionals and established families.

Instant Insights /

How STEM Grads Impact OC's Workforce

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