October 18, 2013—Rising high-tech employment has helped fuel double-digit rent growth in 10 U.S. tech-dominated submarkets, according to the latest research from CBRE Group Inc., a global provider of real estate services. These submarkets, located within major tech-oriented cities such as San Francisco, Austin, New York City, and Silicon Valley, posted rent growth of at least 10% over the past two years, contributing to the gradual recovery of the U.S. office market.
Per the report, U.S. Tech-Twenty: Measuring Office Market Impact, the relationship between high-tech job growth and accelerating rents was especially pronounced in the areas of SOMA in San Francisco, where rents have increased 51% over the past two years, Redwood City in San Francisco Peninsula (up 45%), Midtown South in New York City (up 44%), and Mountain View in Silicon Valley (up 42%).
Other highlights of the report include:
- The rent premium commanded by submarkets with heavy high-tech employment is increasing. The differential between these submarkets and the Tech-Twenty office markets as a whole has grown to 18.1%, compared to 2.2% two years ago.
- When deciding where to locate a high-tech-oriented business or pick property investments, location is increasingly important. Clustering of tech-oriented talent drives both demand for office space and underlying property performance.
- Emerging and high-potential markets represent an opportunity for both occupiers and investors. Atlanta, Chicago, Los Angeles and Baltimore have moved significantly toward growth leadership, and their office markets are showing stronger performance.
