Tech Clusters Favor Investment: CBRE

SAN JOSE-It's not surprising that Silicon Valley should come out on top of the heap for “tech talent” ratings in a new CBRE Group report. San Jose and its northwestern neighbor, San Francisco, ranked first and third, respectively, among tech talent markets, with the nation's capital coming in second, and Boston and Seattle rounding out the top five. Beyond helping to shape the office and industrial tenant bases in these markets, the clustering of tech talent also has implications for development and redevelopment both in the urban CBDs and in submarkets outside them, CBRE says.

“As echo boomers have migrated to submarkets outside of the traditional urban centers across various metro areas, opportunities exist for urban infill mixed-use developments in highly concentrated tech talent markets in which these locational shifts have taken place,” the report states. For example, the growth of San Francisco's South of Market district occurred over time as rehabilitated warehouses and the live-work-play environment attracted tech employers, who in turn were responding to their employees' need for a collaborative environment and desire to be close to burgeoning entertainment districts. These neighborhood amenities in turn help maximize social interaction among workers and can spark innovation.

“It's not so much that tech talent demands a different workplace paradigm, but it's the youngest generation, the one just entering the workforce, that has new and different expectations of the workplace,” Christopher Hood, managing director with CBRE Workplace Strategy, is quoted in the report. “It just so happens that many of these younger workers, from home and abroad, happen to be tech workers.”

However, the report makes it clear that a high-tech occupier base is not necessarily the be-all and end-all for tech talent concentration. “Tech talent can be employed across all industries, and thus markets that one may not intuitively associate with tech may, in fact, employ a significant amount of tech talent,” the report states. Washington, DC, for instance, earns its number-two national ranking on the strength of the federal government's heavy reliance on tech-oriented occupations, which by CBRE's reckoning number more than 20 different job titles.

Further, while the three West Coast tech talent hubs and the top two East Coast centers scored best overall, markets outside CBRE's top five also represent potential for growth. Dallas and Atlanta, to cite two, each offer deep pools of talent, lower labor costs than other large metropolitan areas and strong employment outlooks. Atlanta is also home to an academic tech center, the Georgia Institute of Technology, and Pittsburgh's Carnegie Mellon University is “a premier academic research institution for the computer sciences and robotics,” the report states.

And although New York City falls outside the top five overall, it led the way in tech talent labor supply and tech-oriented degree completion, two of the metrics by which CBRE arrived at its rankings. “As New York City continues to diversify its economic base and the concentration of tech talent grows within the market, the metro area is expected to climb in the overall rankings,” according to the report.

The New York metro area currently ranks eighth in CBRE's rankings. Along with Dallas and Atlanta in sixth and seventh place, respectively, Raleigh-Durham, NC and Austin, TX round out the national top 10.