Here Are The Top Tech Office Markets

The resilience of Washington DC’s office market has been supported throughout the pandemic by one of the strongest tech sectors in the country—and it’s in good company.

“Even before the pandemic, the nation’s capital was starting to transition government jobs to a work-from-home model, and COVID only accelerated it,” write Moody’s Analytics David Caputo and Thomas LaSalvia in a new analysis. “While this sector may downsize some offices, the high volume of leasing by tech companies could not have come at a better time and propped up the local market.”

DC is followed by Seattle, Atlanta, San Francisco, San Jose, Raleigh, Dallas, Chicago, Los Angeles, New York, Baltimore, Austin, Colorado Springs, Boston, and Denver.

According to Moody’s, the cities averaged $39.23 per sf for office rents at the end of 2021 compared to the national average of $21.36/SF. Tech rents rose by nearly 51% nationally, compared to 40% when the sector was in its early days in 1999.

Shifting migration patterns over the last few years have also driven firms to look to secondary markets outside the typical tech clusters, Caputo and LaSalvia write.

“Generally, a well-managed company in a great location understands the tug-of-war between efficiency gains from remaining in an established cluster and the increasing cost of business to stay there,” they say. “Concentrations of labor, intermediate input and information sharing are classic examples of efficiency gains when in an established market. The high tenant demand tends to increase both rent levels and wages particularly in areas with limited buildable land . If costs overshadow benefits, firms will look elsewhere and likely land in cheaper spots, but with fewer benefits, particularly human capital or skill.”

This has been the case for rising tech sectors in the Sun Belt and Mountain West, as well as in cities like Columbus, Ohio. 

“With skilled labor relocating beyond the bounds of established tech hubs and fleeing the lofty rents and wages within them, larger tech firms may rethink their roots,” the Moody’s analysts note. “Silicon Valley, Seattle or Boston will likely remain top tech hubs, but there is movement towards tech sector balance spreading throughout the country.”

The top emerging tech markets—defined by Moody’s as metros with at least 10% more growth in employment for computer and math occupations than the national average since 2018 or at least 4% more median annual wage growth for computer and math occupations since 2015 compared to nationally—include Ventura, Buffalo, Greensboro, Miami, Greenville, Knoxville, New Orleans, Norfolk, San Bernardino, Nashville, Lexington and Wichita. 

Other metros worth watching? Salt Lake City, Charlotte, Oklahoma City, Sacramento, Columbus, and Louisville, according to Moody’s.

“These non-gateway cities have enjoyed encouraging employment and/or wage growth in the sector over the last few years. Growing and diversifying labor pools coupled with their relative affordability put these metros on our radar,” the pair write “Like the emerging markets above, established tech firms looking to geographically expand are also likely paying attention. With human capital as their most important resource, skill migration and relative wage variation remain vital to a company’s location strategy.”