After years of competing for office space in core urban markets, tech companies are now increasingly seeking office space in adjacent suburban markets/submarkets, according to a new report by CBRE. Tech continues to lead the demand for office space, accounting for 19% of all major office leasing activity, according to the report.
CBRE also noted that job growth in the tech sector had averaged 6% since 2010, double the overall job growth rate. However, in 2017, job growth in the tech sector was only 3.4%.
The report also found the following:
Top U.S. Office Rent Growth Markets
Double-digit office rent growth was achieved in 13 markets over the past two years, led by:
- Orange County, CA: 23.3%
- Nashville, TN: 21.2%
- Atlanta, GA: 17.6%
- Charlotte, NC: 16.9%
- Silicon Valley, CA: 16.8%
Top Tech Job Growth Markets
- San Francisco, CA: 39.4%
- Charlotte, NC: 31.6%
- Pittsburgh, PA: 31.4%
- Indianapolis, IN: 27.8%
Top Tech Submarkets with the Lowest Vacancy Rates:
- East Cambridge/Boston: 3.3%
- Palo Alto/San Francisco: 3.7%
- Mount Pleasant-False Creek/Vancouver: 4%
Top Tech Submarkets with the Highest Premiums Over Adjacent Core Market:
- East Cambridge/Boston: 120%
- Palo Alto/San Francisco: 71%
- Santa Monica/Los Angeles: 92%