Rapid growth in jobs and office rents puts Seattle among leaders in top 30 tech markets

Another new report is shining a light on Seattle’s rapid growth among leading tech hubs.

CBRE’s annual Tech-30 report, which measures the tech industry’s impact on North American office real estate markets, shows Seattle is the sixth fastest growing tech market in overall office rent growth. Rents jumped 12.4 percent between Q2 2017 and Q2 2019, up from 11.7 percent in the previous two-year period, CBRE reported.

Seattle is also fourth in tech employment growth, with a rate of 23.7 percent during 2017 and 2018. The 34,000 new jobs added in the market were the highest number among any of the Tech-30 cities.

Vancouver, B.C., San Francisco and Toronto were the top three markets ahead of Seattle in the overall ranking of the 30 markets.

“Seattle’s tech industry is among the largest in North America and is growing at a rapid pace,” said CBRE’s John Miller, senior managing director of the firm’s Seattle office. “This growth, combined with the second strongest tech labor pool in North America, means we’re going to continue to attract tech firms looking to take advantage of our intellectual capital, which will continue to strengthen office fundamentals.”

Major technology companies have leased nearly 2.8 million square feet of office space in the past year, accounting for 45 percent of all leasing activity in the Puget Sound market, CBRE reported. Much of this space is for expansion purposes, which will add even more jobs to the tech industry in the near-term. And perhaps they will be filled by area tech grads, whose number grew by more than 60 percent.

The report also looked at rent gains, rent premiums and net absorption in submarkets that are hot tech spots in the larger overall markets. South Lake Union, home to Amazon and major tech outposts for Facebook, Google and Apple, showed a 6.4 percent rent growth in the past two years and commands a 13.4 percent premium over the overall market average, CBRE reported.

CBRE’s report comes on the heels of last week’s Q3 2019 PayScale Index, which tracks quarterly and annual trends in compensation, and found that wages increased 4 percent year over year in Seattle. The city outpaced the national average of 2.6 percent and only trailed San Francisco, at 4.3 percent.

~Kurt Schlosser, GeekWire

Report: Tech makes up almost all new office jobs in Seattle

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Seattle observers are well aware of the tech industry’s role in the city’s economic boom, but a new report takes it to a new level, finding that more than nine of every 10 office jobs created over the last two years came from the tech sector.

The report by real estate firm CBRE, finds that Seattle tech firms added 23,575 jobs in 2015 and 2016, accounting for 93 percent of all office jobs in the city created during that time span. In raw numbers, Seattle also created more tech jobs than any other single market in the survey.

Seattle has been buoyed by massive growth from hometown tech giant Amazon, which employed 541,900 people worldwide at the end of the last quarter, including more than 50,000 in Seattle. Additionally, more than 100 out-of-town tech companies have set up shop in the Seattle area. A few, like Facebook and Google, have become some of the top tech employers in the city.

The report finds that high tech jobs focused on software and services employed 145,356 people in Seattle in 2016, or about 38.1 percent of office jobs. Tech companies in Seattle have a strong talent pool to pull from, as 45 percent of residents have a bachelor’s degree or higher.

Another area where Seattle stands alone is in its frothy office market. The report listed significant tech leases for each market, and F5 Network’s move to lease the entirety of a new downtown Seattle office tower was the biggest deal spotlighted in the report. The report did not mention two big leases signed by Amazon for a striking new tower, and a large swath of space above the downtown Macy’s.

Despite all these tech office deals, rents for tenants aren’t rising as fast as other markets. Seattle came in 10th in office rent growth. The average asking rent for office space of $32.45 per square foot is less than half of San Francisco’s at $72.90. Developers are active here: the 7 million square feet of new office space under construction in Seattle trails only New York and Silicon Valley.

All these figures point to Seattle as a more established tech market than some of the other top finishers in the report. In Pittsburgh, for example, tech accounted for a slightly higher percentage of new office jobs at 95 percent. But that only translated to 4,400 new jobs, or about one-sixth of Seattle’s new tech jobs over the two-year period.

It also shows that the San Francisco Bay Area is still the top tech region in the country. The report separates San Francisco and Silicon Valley, diluting their numbers. Combined, the two markets accounted for more than 41,000 tech jobs over the two-year period, with more than 15 million square feet of office space under construction.

 


~Nat Levy, Geekwire