Released by Jones Lang LaSalle (JLL), the inaugural High-Technology Industry Report provides an overview of the impact high-tech growth is having on office space supply, demand and pricing conditions by looking at 18 U.S. markets.
The rapid growth in the high-tech sector can be attributed to "a combination of consumers' unquenched demand for new technology, and businesses' application of new technologies, such as cloud computing," explains the report.
Highlights of the document include:
- High-tech strength is impacting office markets across the country with San Francisco, Silicon Valley and newcomer Baltimore experiencing the strongest growth. NewYork City and Seattle round out the top five strongest high-tech markets. (In particular, Baltimore is "hot" due to the influx of high-tech tenants moving there to serve the federal government via the Defense Information Systems Agency at Fort Meade.)
- The high-tech growth cycle seems to be in the early stages, with lots of "running room ahead for more hiring." Data indicates this cycle is vastly different from the tech boom of the late 1990s.
- Of the over half million office-using jobs created nationally since February 2010, 127,000 jobs of them (25 percent) were in high-tech services; a fact illustrating the high-tech sector's rapid growth rate.
- Over the past four quarters, high-tech has made up 50 percent of total venture capital funding. Biotechnology and medical devices combined comprise 25 percent.
- A national office market recovery is underway with established high-tech clusters substantially outperforming other areas of the office sector by recording strong rent growth, the highest net absorption levels, and diminished space availabilities.
"Consumer demand for gadgets, apps and new forms of media, coupled with businesses' technological needs, are what's driving high-tech employment," says Colin Yasukochi, JLL's director of research, NW Region. "Employment in the high-tech sector is a bright spot in an otherwise gray economic picture. "
The JLL report also found that "rising venture capital and initial public offering (IPO) activity is fueling key rapid evolution and growth segments of the high-tech industry." Moreover, the services sector (excludes manufacturing aspects of the high-tech industry) has the greatest direct impact on office space demand--and is growing even faster at 5.9 percent.
Looking forward, "tenants could face a period of significantly decreased leverage by the late 2013/early 2014 timeframe should the current economic recovery regain strength and broaden to include more industries important to office demand creation," predicts the report.