L.A. has a bright tech future ahead—if the talent pool is any indicator. According to recent research from JLL, the current tech talent pool—which includes migrating talent and new talent from universities—supports industry growth. Southern California has the most robust tech talent pool in the nation, with Silicon Valley and Seattle trailing behind at second and third, respectively. The Los Angeles market also has the largest number of tech employment in history, and it is continuing to pump out talent. To find out what this means for the real estate market, we sat down with Amber Schiada, director of research at JLL, for an exclusive interview. Here, she tells all about Southern California's tech talent pool and how it will impact the real estate market.
GlobeSt.com: How is the large tech pool in Los Angeles creating more opportunities and activity in real estate?
Amber Schiada: Firms considering options outside of pricier tech markets, like San Francisco and Boston, are looking more closely at Los Angeles. Access to talent is one of the top concerns for growing tech firms. Some may be surprised to learn that there are more people employed in tech occupations here than in Boston and in San Francisco, with more than 106,000 tech professionals. Boston has about 98,000 and San Francisco (including San Mateo and Marin Counties) has about 89,000. In Los Angeles, a higher concentration of tech talent resides on the Westside and in the Tri-Cities, which correlates with increased market activity we've seen in those office markets.
GlobeSt.com: What types of spaces and in what markets are seeing the most activity as a result of this talent?
Schiada: Much of the demand from tech has been concentrated in Santa Monica and Playa Vista, with Culver City, Hollywood, and Mid-Wilshire seeing more activity in recent quarters. There is great opportunity for tech firms to capitalize on the entertainment industry here, especially as more firms delve into content creation. This means tech companies are seeking space with proximity to existing entertainment clusters, and the creative nature of these firms has led to space preferences that lean toward the open office, natural light, and access to amenities and transit. With almost 5.0 million square feet of adaptive re-use development underway, there are more options opening up that should appeal to these tenants, including the Pen Factory, the Row, and Fourth & Traction in the Arts District.
GlobeSt.com: Are there enough jobs to accommodate this talent pool?
Schiada: Tech companies are growing here, and there seems to be no lack of jobs for talented tech professionals. The challenge is that there is little slack in the labor market, creating headaches for hiring managers. Tech firms always cite lack of talent as their main concern.
GlobeSt.com: Is there any concern that rising costs may deter tech companies from planting roots here?
Schiada: Not at all. Even the highest rents in Los Angeles look like a bargain against prices in San Francisco and Palo Alto. Rising housing costs may be a bigger concern than office costs for growing firms looking to hire young talent, but housing is still more accessible for more people here than in most of the Bay Area. Progressive companies understand that cost is not the ultimate deciding factor, either. Cost is important, but great talent and employee happiness are increasingly more important, and both have a significant impact on productivity and company growth.
GlobeSt.com: How does innovation play a role here, and why is it important to track for the real estate market?
Schiada: Los Angeles has a highly concentrated aerospace and defense industry, and this legacy is just one part of the innovation economy with its engineering talent base. Add to that the strong engineering talent graduating from area colleges and universities that supplies the region with fresh talent annually. There are more people graduating with engineering degrees in Southern California than New York, Boston, and the Bay Area. And beyond that, we also generate the second-greatest number of patents in the U.S. after the Bay Area. New innovations can lead to new company development, and ultimately demand for real estate.
GlobeSt.com: What is your outlook for tech growth in L.A., and what do you see as the major drivers of both tech talent and tech companies?
Schiada: Everyone wants to create content, and Los Angeles is at the center of the global entertainment industry. There has always been a strong lean toward new technologies here, most notably for use in media and entertainment production (i.e. CGI, 3D, etc.). The push for more content development for multiple distribution channels is driving the convergence between tech and media here. We've already seen increased demand from virtual reality and augmented reality firms in submarkets near Hollywood and Culver City, looking to capitalize on the proximity to the entertainment industry. Organically grown tech companies will also be a big driver in the next few years. This is on top of the existing strong cluster of defense and aerospace firms that will likely grow as defense spending increases. All of this bodes well for sustained growth for the tech industry here, and will bolster real estate demand.
L.A. has a bright tech future ahead—if the talent pool is any indicator. According to recent research from JLL, the current tech talent pool—which includes migrating talent and new talent from universities—supports industry growth. Southern California has the most robust tech talent pool in the nation, with Silicon Valley and Seattle trailing behind at second and third, respectively. The Los Angeles market also has the largest number of tech employment in history, and it is continuing to pump out talent. To find out what this means for the real estate market, we sat down with Amber Schiada, director of research at JLL, for an exclusive interview. Here, she tells all about Southern California's tech talent pool and how it will impact the real estate market.
GlobeSt.com: How is the large tech pool in Los Angeles creating more opportunities and activity in real estate?
Amber Schiada: Firms considering options outside of pricier tech markets, like San Francisco and Boston, are looking more closely at Los Angeles. Access to talent is one of the top concerns for growing tech firms. Some may be surprised to learn that there are more people employed in tech occupations here than in Boston and in San Francisco, with more than 106,000 tech professionals. Boston has about 98,000 and San Francisco (including San Mateo and Marin Counties) has about 89,000. In Los Angeles, a higher concentration of tech talent resides on the Westside and in the Tri-Cities, which correlates with increased market activity we've seen in those office markets.
GlobeSt.com: What types of spaces and in what markets are seeing the most activity as a result of this talent?
Schiada: Much of the demand from tech has been concentrated in Santa Monica and Playa Vista, with Culver City, Hollywood, and Mid-Wilshire seeing more activity in recent quarters. There is great opportunity for tech firms to capitalize on the entertainment industry here, especially as more firms delve into content creation. This means tech companies are seeking space with proximity to existing entertainment clusters, and the creative nature of these firms has led to space preferences that lean toward the open office, natural light, and access to amenities and transit. With almost 5.0 million square feet of adaptive re-use development underway, there are more options opening up that should appeal to these tenants, including the Pen Factory, the Row, and Fourth & Traction in the Arts District.
GlobeSt.com: Are there enough jobs to accommodate this talent pool?
Schiada: Tech companies are growing here, and there seems to be no lack of jobs for talented tech professionals. The challenge is that there is little slack in the labor market, creating headaches for hiring managers. Tech firms always cite lack of talent as their main concern.
GlobeSt.com: Is there any concern that rising costs may deter tech companies from planting roots here?
Schiada: Not at all. Even the highest rents in Los Angeles look like a bargain against prices in San Francisco and Palo Alto. Rising housing costs may be a bigger concern than office costs for growing firms looking to hire young talent, but housing is still more accessible for more people here than in most of the Bay Area. Progressive companies understand that cost is not the ultimate deciding factor, either. Cost is important, but great talent and employee happiness are increasingly more important, and both have a significant impact on productivity and company growth.
GlobeSt.com: How does innovation play a role here, and why is it important to track for the real estate market?
Schiada: Los Angeles has a highly concentrated aerospace and defense industry, and this legacy is just one part of the innovation economy with its engineering talent base. Add to that the strong engineering talent graduating from area colleges and universities that supplies the region with fresh talent annually. There are more people graduating with engineering degrees in Southern California than
GlobeSt.com: What is your outlook for tech growth in L.A., and what do you see as the major drivers of both tech talent and tech companies?
Schiada: Everyone wants to create content, and Los Angeles is at the center of the global entertainment industry. There has always been a strong lean toward new technologies here, most notably for use in media and entertainment production (i.e. CGI, 3D, etc.). The push for more content development for multiple distribution channels is driving the convergence between tech and media here. We've already seen increased demand from virtual reality and augmented reality firms in submarkets near Hollywood and Culver City, looking to capitalize on the proximity to the entertainment industry. Organically grown tech companies will also be a big driver in the next few years. This is on top of the existing strong cluster of defense and aerospace firms that will likely grow as defense spending increases. All of this bodes well for sustained growth for the tech industry here, and will bolster real estate demand.
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