Greater Boston ranks second in total high-tech employment, and fourth in high-tech venture capital funding among major U.S. markets. This is according to our 2014 U.S. High-tech Office Outlook, a national ranking of top cities for high-tech companies. The ranking, just released and reported in the Boston Business Journal, shows the impact of the sector on neighborhoods, employment, housing prices and amenities.
“Tech companies are looking for new locations for many reasons, not just for intellectual capital, or venture capital funding but other factors such as standard of living,” said Julia Georgules, co-lead of JLL’s Technology Research group. “In our research, we call this ‘market dynamism.’ We have looked at different lifestyle factors for each of the 34 tech hubs including proximity to transport and walkable amenities.”
While the high-tech industry’s growth is driving employers to find new locations for both talent and real estate, traditional high-tech cities are not exactly struggling. Long-standing hubs continue to function as the industry’s economic engines. In fact, seven traditionally high-tech-centric markets represent more than a fifth (21.7 percent) of the 65.4 million square feet of office space under construction across the country. Together, 14.2 million square feet of office space is under construction in Boston, the Bay Area, New York’s Midtown South, Seattle, Portland and Austin.
“High-tech employment continues to be a driving force for the Boston economy and real estate market,” said JLL New England Senior Research Analyst Jordan Yarboro. “Boston ranks second trailing only Silicon Valley in total high-tech employment. In fact, Greater Boston experienced a 4.3 percent growth in high-tech jobs over the year.”
As rents escalate and space becomes scarce in mainstay markets like San Francisco, Silicon Valley and Manhattan, the lure of more affordable prices have high-tech companies seeking talent and real estate elsewhere. The savings potential is huge. Downtown Palo Alto, considered the heart of Silicon Valley, has seen such high demand that the office market is just 3.6 percent vacant with average asking rents at $86 per square foot compared to the national average of $30.
This even tops New York City’s Plaza District at $85 per square foot. And rents in smaller markets can be less than half that figure. “High-tech’s growth is not exclusive to traditional high-tech markets anymore,” said Cara Trani, co-lead of JLL’s Technology brokerage group.
“Here in Greater Boston, we see growing high-tech clusters in the suburbs, Cambridge and CBD. Companies both large and small are competing for top talent, and office space is one of the ways they can use to recruit and retain,” concluded Jordan.
Our 2014 report features the top 34 high-tech markets across the country. It digs deep into what makes a market “cool” or “livable” with a new Market Dynamism index.
To get a copy of this report contact us here.