The Industries Driving Employment Growth Are…

LOS ANGELES—The industries driving employment growth may surprise you. Tech and media industries make all of the headlines, but employment services and management and technical consulting industries actually account for 40% of office employment growth in the city since 2010, according to a study from CBRE. Of course, tech and media also make up a significant portion of the employment growth pie, but this report shows that those industries aren't the largest drivers of employment growth.

“Management and technical consulting has been a particularly steady driver of demand,” Maximilian Saia, senior research analyst at CBRE, tells GlobeSt.com. “These industries are growing in a very dynamic and exciting way but it is also important to look at the bigger picture and realize that tech and creative isn't the whole story; not by a long shot. L.A. is such a diverse place and the same can be said for the drivers of office demand.”

As a result, these industries—which use more traditional office spaces—are major office occupiers; however, creative office tends to generate higher rental rates and creative spaces tend to be higher quality. “Over time, absorption tracks very closely with employment growth, so the industries we list as employment drivers are also driving a large percentage of the total office absorption,” says Saia. “Overall rental rates tend to be higher for tech and creative companies, which are constantly seeking out and paying top dollar for the highest quality space in order to attract talent.”

So, why does tech and media get all of the attention? In addition to commanding high rents, Saia says that tech companies tend to have more household names that service-based companies. Even though they get attention, tech firms won't be as dominant of a player in the L.A. market—in the same way tech rules San Francisco—for many years. “Tech and creative companies are sexy and often have very big, recognizable names associated with them,” says Saia. “Some creative industries are very stable and consistent drivers of demand, whereas others like tech are growing at a faster pace than overall office demand in Los Angeles. It would take a long time for tech and similar industries to become the dominate drivers like you see in the Bay Area, but they will definitely become a much bigger share of overall office demand in the coming years.”

While tech and media will eventually dominate the market, employment and management services firms will continue to lead the market in employment growth for the next several years, and other sectors may start to see more growth as well. “Employment services and consulting will continue to be primary drivers over the next several years,” says Saia. “I would expect some sectors that have had much slower growth over the past five to seven years, such as finance, to rebound in the coming years and drive office demand in a more meaningful way again.”

LOS ANGELES—The industries driving employment growth may surprise you. Tech and media industries make all of the headlines, but employment services and management and technical consulting industries actually account for 40% of office employment growth in the city since 2010, according to a study from CBRE. Of course, tech and media also make up a significant portion of the employment growth pie, but this report shows that those industries aren't the largest drivers of employment growth.

“Management and technical consulting has been a particularly steady driver of demand,” Maximilian Saia, senior research analyst at CBRE, tells GlobeSt.com. “These industries are growing in a very dynamic and exciting way but it is also important to look at the bigger picture and realize that tech and creative isn't the whole story; not by a long shot. L.A. is such a diverse place and the same can be said for the drivers of office demand.”

As a result, these industries—which use more traditional office spaces—are major office occupiers; however, creative office tends to generate higher rental rates and creative spaces tend to be higher quality. “Over time, absorption tracks very closely with employment growth, so the industries we list as employment drivers are also driving a large percentage of the total office absorption,” says Saia. “Overall rental rates tend to be higher for tech and creative companies, which are constantly seeking out and paying top dollar for the highest quality space in order to attract talent.”

So, why does tech and media get all of the attention? In addition to commanding high rents, Saia says that tech companies tend to have more household names that service-based companies. Even though they get attention, tech firms won't be as dominant of a player in the L.A. market—in the same way tech rules San Francisco—for many years. “Tech and creative companies are sexy and often have very big, recognizable names associated with them,” says Saia. “Some creative industries are very stable and consistent drivers of demand, whereas others like tech are growing at a faster pace than overall office demand in Los Angeles. It would take a long time for tech and similar industries to become the dominate drivers like you see in the Bay Area, but they will definitely become a much bigger share of overall office demand in the coming years.”

While tech and media will eventually dominate the market, employment and management services firms will continue to lead the market in employment growth for the next several years, and other sectors may start to see more growth as well. “Employment services and consulting will continue to be primary drivers over the next several years,” says Saia. “I would expect some sectors that have had much slower growth over the past five to seven years, such as finance, to rebound in the coming years and drive office demand in a more meaningful way again.”