Charlotte Beats Atlanta in This Sector

ATLANTA—Charlotte is climbing the ranks among cities in which technology companies want to lease office space. How does it compare to Atlanta?

Let's first look at the big picture? According to a new research report from CBRE that analyzes the top 30 tech cities across the US and Canada, there's an aggregate rent premium of 11% across all 30 markets. That number that jumps higher in the hottest tech submarkets, which are listed as Boston's East Cambridge at 87%, Santa Monica (Los Angeles) at 85% and Mountain View (Silicon Valley) at 73%.

In Charlotte, the technology job growth rate has risen 17.3% between 2012 and 2014, placing it above most markets and in the number nine spot among the top 30. The technology sector has grown as a result of the overall office market's growth and stability. Additionally, Charlotte offers lower than average office rents, ranking number 21 nationally for office rent growth.

“Charlotte has completely welcomed the tech scene and understands the impact on the overall economy and commercial real estate, as evident by the office market rent growth,” David Hartzell of CBRE Research, tells GlobeSt.com. “The current period (the second quarter of 2013 through the second quarter of 2015) shows nearly double the rent growth, at 8%, of the previous period (the second quarter of 2012 through the second quarter of 2014) at 4.3%. This correlates with the high tech job growth increase from 13.4% to 17.3%. As vacancy tightens and the tech sectors demand increases, we are counting on some of the new supply under construction serving the tech and creative firms.”

Charlotte tech firms have clustered in the very affordable Northeast submarket that has rents 12% less than the overall market average. Charlotte is considered a top discount market in general since its rents are already 25% below the national average of $28.97 and a destination for tech employers. It is also considered an emerging market with potential for continued growth.

In 2014, Charlotte had 19,389 tech jobs, with the Northeast submarket leading Charlotte's tech scene. A high educational attainment rating of 41.9% of residents with a bachelor's degree or higher gives Charlotte a skilled labor force. Tech companies have increased their interest in Charlotte; from startups to large corporate users, firms are actively searching for available space.

Charlotte's young and diverse workforce, supplied by several highly-respected and high-profile area colleges and universities, adds to tech companies' interest and attraction to the area. With a vacancy rate under 10%, the market is tight but healthy.

“A lot of the momentum can be attributed to the University of North Carolina at Charlotte's talent pool,” says Hartzell. “A large portion of the creative and tech firms in the Charlotte area have clustered in the Northeast submarket, home of UNCC, and are benefitting from the prospect of attracting local tech talent. The city has also taken measures to transform part of its in-town market to be more attractive for Millennials, which fosters local interest and bolsters talent retention.”