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Companies Are Willing to Pay a Premium for Top Tech Talent, According to CBRE’s 2017 “Scoring Tech Talent Report”

San Francisco Bay Area and Seattle standout for quality, while best-value markets include Toronto, Vancouver, Indianapolis, Pittsburgh and Detroit

LOS ANGELES--(BUSINESS WIRE)--Jul. 18, 2017-- Strong demand for skills, such as software development, hardware engineering and information security, coupled with a tight labor supply, is driving companies to locate in markets with the largest concentrations of high-quality talent, according to CBRE’s fifth annual Scoring Tech Talent Report. And while value is a key driver when it comes to choosing an office location, companies are increasingly willing to pay a premium to access the highest quality tech talent.

Overall cost variances from market to market are striking: Taking both talent and real estate costs into consideration, the “typical” U.S.-based, 500-person tech company needing 75,000 sq. ft. of office space can expect its total annual cost to range from US$24 million in Vancouver, the least expensive of the 50 markets included in the CBRE report, to US$57 million in the San Francisco Bay Area, the most expensive market.

According to CBRE’s analysis, which can be viewed in detail through the interactive Tech Talent Analyzer, the best-value markets with the highest quality of talent are Toronto and Vancouver (due in part to the strong U.S. dollar) followed by Indianapolis, Pittsburgh and Detroit.

“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. 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,” said Colin Yasukochi, director of research and analysis for CBRE in the San Francisco Bay Area.

Tech Talent Scorecard

Atlanta and Toronto are the big stories on this year’s Tech Talent Scorecard. Atlanta entered the top five for the first time along with traditional stalwarts like San Francisco Bay Area, Seattle, New York and Washington, D.C. Atlanta bumped Austin out of the top five, which fell back to number 8. 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.

Meanwhile, Toronto jumped a full six spots 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 rankings for the Tech Talent Scorecard are determined based on 13 unique metrics including tech talent supply, growth, concentration, cost, completed tech degrees, industry outlook for job growth, and market outlook for both office and apartment rent cost growth.

Top Momentum Markets

Tech job growth gained momentum in 28 of the 50 markets. This means job creation grew faster in the past two years (2015-2016) compared with the prior two-year period (2013-2014). The number of markets experiencing faster growth almost tripled from 10 markets in last year’s Scoring Tech Talent report.

The top 10 momentum markets included Madison, WI; Ft. Lauderdale, FL; Salt Lake City, UT; Miami, FL; Kansas City, MO; Omaha, NE; Columbus OH; Pittsburgh, PA; Orange County, CA and Sacramento, CA.

Commercial Real Estate Market Impact

The high-tech industry’s share of major leasing activity nationwide increased to 19 percent in 2017 from 11 percent in 2011—the largest single share of any industry. Accordingly, office rents are up in almost every market in the top 50 and vacancy has declined, with the biggest impact in the most tech-concentrated sub-markets.

Rent growth is most prominent in the large tech markets, with office rents in the San Francisco Bay Area two-thirds higher than five years ago. But the decrease in vacancy rates is present across both large and small tech markets. Vacancy rates in the San Francisco Bay Area and New York are the lowest of the top 50 tech talent markets, and some small markets like Madison and Nashville are not far behind.

To view the full report, please click here. To view individual markets statistics and rankings, including rankings on the Scorecard, click to access the Tech Talent Analyzer.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

Source: CBRE Group, Inc.

CBRE Group, Inc.
Christy Ingle
949.751.9200
christy.ingle@cbre.com