CBRE: Tech Firms Will Pay Higher Office Costs To Access Technology Talent
While value remains a key driver for firms choosing an office location, employers will pay a premium to access the highest quality technology talent, reported CBRE, Los Angeles.
The CBRE Scoring Tech Talent Report noted “striking” cost variances between various U.S. and Canadian markets. Taking both personnel and real estate costs into consideration, the typical 500-person technology company needing 75,000 square feet of office space can expect to pay between $24 million (U.S. dollars) per year in Vancouver, B.C. to $57 million in the San Francisco Bay area, the most expensive market.
Best-value markets with significant technology talent include Toronto, Ont., Indianapolis, Ind., Pittsburgh, Pa. and Detroit, CBRE said.
“Since the cost of talent is the largest expense for most firms, the quality of that tech talent is becoming one of their most important considerations,” said CBRE Director of Research and Analysis Colin Yasukochi. “The skills of the available labor pool do not appear to align with available jobs, causing a structural impediment to growth for companies across North America.”
CBRE called Atlanta and Toronto “the big stories” of its annual report. Atlanta entered the top five for the first time, bumping Austin, Texas. “Atlanta is one of the few large markets that maintained its fast pace of tech talent growth and has an accelerated forecast for future tech job creation, which elevated its position in the rankings,” the report said.
Toronto jumped to number 6 from last year’s number 12. The elevated ranking was due to its talent employment base growing by the highest number of workers.
“The top 10 markets for momentum are all moderately priced and grew at least 10 percent faster [then the overall average] than during the prior two-year period,” Yasukochi said. “Tech employment growth has a multiplier effect that positively impacts economic growth, which in turn can have an immense impact on commercial real estate activity.”
CBRE examined 13 metrics including tech talent supply, industry outlook for job growth and the market outlook for both office and apartment rent cost growth to prepare the ranking.
