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High-tech sector driving office boom in US

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The technology industry boom in North America has been creating jobs at an exponential rate, and research reveals it may also be driving the market for office spaces in key areas, appropriately labelled "tech cities".

Getting the most out of this office market boom involves investing in future technology hubs and ensuring you have planned accordingly for the changing nature of this market.

Tech industry boom

How well is the digital sector doing? The latest research from CBRE estimates that the high-tech services industry has created 730,000 new jobs since 2009, at a growth rate of 34 per cent. As these jobs account for one-fifth of all new jobs requiring office space, the industry was responsible for 20 per cent of key leasing activity in 2015. 

According to the study, the fastest growing tech city in the United States is San Francisco, due to the high rate of digital jobs available (43 per cent) and the rise in office rent space required for these types of jobs (31 per cent). 

"The resounding message from around the world is that such workers want the lifestyle that is afforded by the big cities."

Global real estate consultancy Knight Frank reiterates these findings in its 2015 report, Global Cities. It estimates that the economic opportunities the technology sector provides will create high demand for prime real estate, especially in key cities.

The study indicates that the most sought-after employees in the digital industry want a lifestyle that is facilitated by big cities, resulting in firms increasingly basing their offices in these areas.

"The resounding message from around the world is that such workers want the lifestyle that is afforded by the big cities, which has turned them into talent magnets, and consequently multi-national corporations feel it is essential to locate in the global cities," Knight Frank's report states.

The booming tech industry is requiring an increasing amount of office space.The booming tech industry is requiring an increasing amount of office space.

Where should you be investing?

According to CBRE, one the best places to invest in is Austin, Texas. This is due to a culmination of lower rents for office spaces and a fast-growing high tech workforce.

Knight Frank estimates that US $744.1 million in cross-border investment occurred in Austin in 2014 to July 2015. It attributes this to a combination of technology infrastructure, the energy sector, higher education and general culture. 

Austin's technology employment currently accounts for 3.94 per cent of the total jobs in the city, and as digital companies see the potential for growth, this is likely to increase.

Due to the unpredictable nature of property, CBRE notes that real estate investors should ensure they have taken the feasibility of the property into account, and plan accordingly before investing in office markets.

Date Published: 09 Sep 2015
Category: General News

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