Tech Demand for Office Space Spills into Suburban Markets

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:

  1. Orange County, CA:  23.3%
  2. Nashville, TN:  21.2%
  3. Atlanta, GA:  17.6%
  4. Charlotte, NC:  16.9%
  5. Silicon Valley, CA:  16.8%

Top Tech Job Growth Markets

  1. San Francisco, CA:  39.4%
  2. Charlotte, NC:  31.6%
  3. Pittsburgh, PA:  31.4%
  4. Indianapolis, IN:  27.8%

Top Tech Submarkets with the Lowest Vacancy Rates:

  1. East Cambridge/Boston:  3.3%
  2. Palo Alto/San Francisco:  3.7%
  3. Mount Pleasant-False Creek/Vancouver:  4%

Top Tech Submarkets with the Highest Premiums Over Adjacent Core Market:

  1. East Cambridge/Boston:  120%
  2. Palo Alto/San Francisco:  71%
  3. Santa Monica/Los Angeles: 92%